SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
UNO RESTAURANT CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
Common Stock
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(2) Aggregate number of securities to which transaction
applies:
4,560,275
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
$9.75
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(4) Proposed maximum aggregate value of transaction:
$44,462,681
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(5) Total fee paid:
$8,893
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/ / Fee paid previously with preliminary materials.
/X/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
$8,869
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(2) Form, Schedule or Registration Statement No.:
Schedule 14A (File No. 5-39163)
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(3) Filing Party:
Uno Restaurant Corporation
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(4) Date Filed:
April 27, 2001
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[LOGO]
UNO RESTAURANT CORPORATION
100 CHARLES PARK ROAD
WEST ROXBURY, MASSACHUSETTS 02132
June , 2001
DEAR STOCKHOLDERS:
You are cordially invited to attend a special meeting of stockholders of Uno
Restaurant Corporation ("Uno"), to be held on , 2001, at 10:00 a.m. local
time, at located at .
At the special meeting, you will be asked to consider and vote upon a
proposal to adopt and approve the Agreement and Plan of Merger, dated as of
April 19, 2001, among Uno, Uno Restaurant Holdings Corporation ("Parent") and
Uno Acquisition Corp. ("Newco"). Aaron D. Spencer, our chairman and majority
stockholder, formed and is currently the sole stockholder of Parent. Newco is a
wholly owned subsidiary of Parent.
Under the merger agreement, Newco will be merged with and into Uno, with Uno
as the surviving corporation. Upon completion of the merger, each issued and
outstanding share of Uno common stock not owned by Parent will be entitled to
receive $9.75 per share in cash, without interest. Prior to the merger,
Mr. Spencer, Mr. Spencer's two adult children, Mark Spencer and Lisa Cohen, and
Uno Associates, a general partnership owned 80% by Mr. Spencer and 10% by each
of Mark Spencer and Lisa Cohen (collectively, the "Spencer Group"), will
contribute substantially all their shares of Uno common stock in exchange for
shares of capital stock of Parent. Parent will not be entitled to receive the
$9.75 per share merger consideration.
After the merger, Uno will continue its operations as a privately held
company. Parent will be the sole stockholder of Uno as the surviving
corporation. Current stockholders of Uno, other than the Spencer Group and four
key executive officers of Uno, Craig S. Miller, Paul W. MacPhail, Alan M. Fox
and Robert M. Vincent (collectively, the "Management Group"), will not
participate in any future earnings and growth of Uno as the surviving
corporation. The Spencer Group and the Management Group (collectively referred
to as the "Continuing Stockholders") will own all of the equity in Parent. Uno
stock option holders will continue as holders of options to purchase shares of
common stock of Uno as the surviving corporation. After the merger, Uno may, but
has not yet decided to, offer to repurchase and cancel outstanding stock options
of Uno as the surviving corporation.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
FAIRNESS OR MERITS OF THIS TRANSACTION, OR PASSED UPON THE ACCURACY OR ADEQUACY
OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Details of the merger and the merger agreement are discussed in the enclosed
proxy statement, the forepart of which includes a summary of the terms of the
merger and certain questions and answers relating to the proposed transaction. A
copy of the merger agreement is attached as Exhibit A to the proxy statement.
The board of directors of Uno formed a special committee of independent
directors who are not officers or employees of Uno, to evaluate, negotiate and,
if appropriate, recommend the merger and the merger agreement.
The board of directors, acting in part on the unanimous recommendation of
the special committee of directors, has approved the merger and the merger
agreement. The board of directors and special committee believe that the terms
of the merger and the merger agreement are fair to, and in the best interest of,
Uno stockholders, other than the Continuing Stockholders.
In reaching their decision, the board of directors and the special committee
considered, among other factors, the written opinion of Adams, Harkness &
Hill Inc., the special committee's financial advisor. Based upon and subject to
the considerations and limitations set forth in their opinion, Adams,
Harkness & Hill concluded that the $9.75 per share cash consideration to be
received in the merger by the stockholders of Uno is fair, from a financial
point of view, to the stockholders of Uno other than the Continuing
Stockholders. Not earlier than five days prior to the stockholders meeting,
Adams, Harkness & Hill will deliver an updated opinion to the special committee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS OF UNO VOTE "FOR"
THE ADOPTION AND APPROVAL OF THE MERGER AGREEMENT.
The affirmative vote of a majority of the outstanding shares of Uno common
stock is required to adopt and approve the merger agreement. While not required
by the Delaware General Corporation Law, Uno's restated certificate of
incorporation, as amended, or Uno's amended and restated bylaws, the merger also
is conditioned upon the affirmative vote of the holders of a majority of shares
of common stock held by stockholders other than the Continuing Stockholders.
This condition may be waived with the approval of Parent, Newco, Uno and the
special committee of the board of directors.
Stockholders of Uno will be entitled to appraisal rights under Delaware law
in connection with the merger as described in the accompanying proxy statement.
IT IS VERY IMPORTANT TO US THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL
MEETING, WHETHER OR NOT YOU PLAN TO ATTEND PERSONALLY. THEREFORE, YOU SHOULD
COMPLETE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN
THE ENCLOSED POSTAGE PAID ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES ARE
REPRESENTED AT THE SPECIAL MEETING.
The accompanying notice of meeting and proxy statement explain the merger
and the merger agreement and provide specific information concerning the special
meeting of stockholders. Please read these materials carefully.
Sincerely,
/s/ Craig S. Miller
Craig S. Miller, President and Chief
Executive Officer
This proxy statement is dated , 2001 and is first being mailed
to stockholders on or about , 2001.
UNO RESTAURANT CORPORATION
100 CHARLES PARK ROAD
WEST ROXBURY, MASSACHUSETTS 02132
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2001
Notice is hereby given that a special meeting of the stockholders of Uno
Restaurant Corporation ("Uno") will be held on , 2001 at 10:00 a.m. local
time at for the following purposes:
1. To consider and vote upon a proposal to adopt and approve the Agreement
and Plan of Merger dated as of April 19, 2001, among Uno Restaurant Holdings
Corporation ("Parent"), Uno Acquisition Corp., ("Newco"), and Uno, pursuant to
which Newco will be merged with and into Uno with Uno being the surviving
corporation and each stockholder of Uno other than Parent will be entitled to
receive $9.75 per share in cash, without interest, for each share of Uno common
stock in accordance with and subject to the terms and conditions contained in
the merger agreement. The merger agreement is more fully described in the
accompanying proxy statement and a copy of the merger agreement is attached as
Exhibit A to the accompanying proxy statement.
2. To consider, act upon and transact such other matters as may properly
come before the special meeting or any adjournments or postponements thereof.
The affirmative vote of a majority of the outstanding shares of Uno common
stock is required to adopt and approve the merger agreement and the transactions
contemplated thereby, including the merger. While not required by the Delaware
General Corporation Law, Uno's restated certificate of incorporation, as
amended, or Uno's amended and restated bylaws, unless waived by the parties, the
merger also is conditioned upon the affirmative vote of a majority of shares of
common stock held by stockholders other than Aaron D. Spencer, Uno Associates,
Mark Spencer and Lisa Cohen and four key executive officers of Uno, Craig S.
Miller, Paul W. MacPhail, Alan M. Fox and Robert M. Vincent, each of whom will
continue to own an indirect equity interest in Uno as the surviving corporation
through their ownership of the equity of Parent.
YOUR BOARD OF DIRECTORS, BASED IN PART UPON THE UNANIMOUS RECOMMENDATION OF
A SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS, RECOMMENDS THAT YOU VOTE "FOR"
ADOPTION AND APPROVAL OF THE MERGER AGREEMENT.
The board of directors has fixed the close of business on ,
2001 as the record date for determining the stockholders entitled to notice of
and to vote at the special meeting and any adjournments or postponements
thereof. Only holders of record of shares of Uno common stock at the close of
business on the record date are entitled to notice of and to vote at the special
meeting.
If the merger agreement is adopted and approved by the stockholders at the
special meeting and the merger is completed, any stockholder (1) who files with
Uno before the taking of the vote on the adoption and approval of the merger
agreement a written demand stating that he or she intends to seek appraisal for
his or her shares of common stock if the merger is completed and (2) whose
shares are not voted in favor of the merger agreement will have the right to
seek appraisal of his or her shares of common stock within 120 days after the
date a certificate of merger is filed with the Secretary of State of the State
of Delaware. Uno and any stockholder seeking an appraisal shall have the rights
and duties and shall follow the procedures set forth in Section 262 of the
Delaware General Corporation Law, a copy of which is attached as Exhibit B to
the accompanying proxy statement. See the section entitled "Special
Factors--Appraisal Rights" in the proxy statement for more information.
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF HOW MANY SHARES OF UNO COMMON
STOCK YOU OWN. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
ITS EXERCISE. IF YOU ARE PRESENT AT THE SPECIAL MEETING OR ANY ADJOURNMENTS
THEREOF, YOU MAY REVOKE YOUR PROXY AND VOTE PERSONALLY ON THE MATTERS PROPERLY
BROUGHT BEFORE THE SPECIAL MEETING.
By Order of the Board of Directors
/s/ GEORGE W. HERZ II
George W. Herz II
Secretary
West Roxbury, Massachusetts
, 2001
TABLE OF CONTENTS
SUMMARY TERM SHEET.......................................... 1
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 4
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
INFORMATION............................................... 10
UNO RESTAURANT CORPORATION SELECTED HISTORICAL FINANCIAL
DATA...................................................... 11
MARKET AND MARKET PRICE..................................... 13
Market Information........................................ 13
Number of Stockholders.................................... 13
Dividends................................................. 13
THE SPECIAL MEETING......................................... 15
General................................................... 15
Matters to be Considered at the Special Meeting........... 15
Record Date and Voting Information........................ 16
Quorum.................................................... 17
Proxies; Revocation....................................... 17
Expenses of Proxy Solicitation............................ 17
Adjournments.............................................. 17
Appraisal Rights.......................................... 17
THE PARTICIPANTS............................................ 18
Uno Restaurant Corporation................................ 18
Uno Restaurant Holdings Corporation....................... 18
Uno Acquisition Corp...................................... 18
The Continuing Stockholders............................... 19
SPECIAL FACTORS............................................. 20
Background of the Merger.................................. 20
Recommendation of the Board of Directors; Fairness of the
Merger.................................................. 32
Determination of the Fairness of the Merger by Parent,
Newco and the Affiliate Stockholders.................... 38
Forward Looking Information; Certain Projections.......... 40
Opinion of Financial Advisor to the Special Committee..... 53
Purpose and Structure of the Merger....................... 65
Alternatives to the Merger................................ 66
Effects of the Merger..................................... 67
Risks that the Merger Will Not Be Completed............... 68
Interests of the Continuing Stockholders in the Merger.... 69
Certain Risks in the Event of Bankruptcy.................. 76
Merger Financing.......................................... 76
Estimated Fees and Expenses of the Merger................. 80
Federal Income Tax Consequences........................... 81
Anticipated Accounting Treatment of Merger................ 82
Certain Regulatory Matters................................ 82
Appraisal Rights.......................................... 83
Litigation Challenging the Merger......................... 86
THE MERGER AGREEMENT........................................ 87
The Merger................................................ 87
Effective Time of Merger.................................. 87
Certificate of Incorporation, Bylaws and Directors and
Officers of Uno as the Surviving Corporation............ 87
i
Conversion of Common Stock................................ 87
Payment For Shares........................................ 88
Transfer of Shares........................................ 88
Treatment of Stock Options................................ 88
Uno Stockholder Approval.................................. 88
Indemnification and Insurance............................. 89
Representations and Warranties............................ 89
Conduct of Business Pending the Merger.................... 91
No Solicitation........................................... 91
Access to Information..................................... 92
Conditions to the Merger.................................. 92
Waiver.................................................... 93
Termination of the Merger Agreement....................... 94
Expense Reimbursement..................................... 95
Amendments................................................ 96
COMMON STOCK PURCHASE INFORMATION........................... 97
Purchases by Uno.......................................... 97
Purchases by the Continuing Stockholders.................. 97
Purchases by Parent and Newco and Their Directors and
Executive Officers...................................... 97
Recent Transactions....................................... 97
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 98
INDEPENDENT AUDITORS........................................ 99
FUTURE STOCKHOLDER PROPOSALS................................ 99
WHERE STOCKHOLDERS CAN FIND MORE INFORMATION................ 99
Exhibit A Agreement and Plan of Merger dated as of
April 19, 2001 among Uno, Parent and Newco..... A-1
Exhibit B Section 262 of Delaware General Corporation
Law....................................................... B-1
Exhibit C Fairness Opinion of Adams, Harkness &
Hill Inc. dated April 4, 2001............................. C-1
Exhibit D Information relating to the directors and
executive officers of Uno, the Continuing
Stockholders, Parent and Newco and the
principals of Uno Associates................... D-1
ii
SUMMARY TERM SHEET
This summary term sheet briefly describes the material terms of the proposed
merger of Uno with Newco and may not contain all of the information that is
important to you. We urge you to read this entire proxy statement carefully,
including the exhibits. The term "Newco" refers to Uno Acquisition Corp. and the
term "Parent" refers to Uno Restaurant Holdings Corporation.
- - THE MERGER. Uno has entered into a merger agreement that provides for the
merger of Uno with a newly formed corporation, Newco, controlled by Aaron D.
Spencer, our chairman and majority stockholder. Following the merger, Uno will
cease to be a publicly held company. See "The Merger Agreement" beginning on
page 87.
- - PAYMENT. In the merger, all shares of Uno common stock other than those held
by Parent will be converted into the right to receive $9.75 in cash, without
interest. Only stockholders who do not properly elect to seek appraisal rights
under Delaware law will be entitled to receive the merger consideration. See
"The Merger Agreement" beginning on page 87.
- - UNO. Uno Restaurant Corporation owns and operates 113 and franchises 67
casual dining, full-service restaurants operating primarily under the name
Pizzeria Uno ... Chicago Bar & Grill. Uno also distributes branded and
non-branded, Chicago-style deep-dish pizza, calzones, and other pizza products.
Uno's common stock is listed on the New York Stock Exchange under the symbol
"UNO." The board of directors of Uno, based in part on the unanimous
recommendation of the special committee, has unanimously determined that the
terms of the merger agreement and the merger are fair to, and in the best
interests of, Uno stockholders, other than Aaron D. Spencer, Uno's chairman and
majority stockholder, Mr. Spencer's two adult children, Mark Spencer and Lisa
Cohen, Uno Associates, a general partnership owned 80% by Mr. Spencer and 10% by
each of Mark Spencer and Lisa Cohen, and by four key executive officers of Uno,
Craig S. Miller, Paul W. MacPhail, Alan M. Fox and Robert M. Vincent (the
"Continuing Stockholders"). The board of directors recommends the adoption and
approval of the merger agreement by Uno stockholders. See "The Participants"
beginning on page 18 and "Special Factors--Recommendation of the Board of
Directors; Fairness of the Merger" beginning on page 32.
- - PARENT. Uno Restaurant Holdings Corporation is a newly organized Delaware
corporation currently owned by Mr. Spencer. Immediately following the merger,
Parent will be owned by the Continuing Stockholders. Parent will be the sole
stockholder of Uno as the surviving corporation. Parent, Uno Associates and
Mr. Spencer, Craig S. Miller, Paul W. MacPhail, Alan M. Fox and Robert M.
Vincent, believe that the merger is fair to the stockholders of Uno other than
the Continuing Stockholders. See "The Participants" beginning on page 18 and
"Special Factors--Determination of the Fairness of the Merger by Parent, Newco
and the Affiliate Stockholders" beginning on page 38.
- - NEWCO. Uno Acquisition Corp. is a newly organized Delaware corporation wholly
owned by Uno Restaurant Holdings Corporation, Parent. Newco was formed solely
for the purpose of engaging in the merger transaction. Newco believes that the
merger is fair to the stockholders of Uno other than the Continuing
Stockholders. See "The Participants" beginning on page 18.
- - SPECIAL COMMITTEE. Uno's board of directors formed a special committee of
directors to evaluate, negotiate and, if appropriate, recommend the merger and
the terms of the merger agreement with Parent and Newco. The special committee
consists solely of independent directors who are not officers or employees of
Uno and who have no financial interest in the completion of the merger different
from Uno stockholders and option holders generally. The members of the special
committee are Tamara P. Davis, chairman of the special committee, John T.
Gerlach, Kenneth D. Hill and James J. Kerasiotes. See "Special
Factors--Background of the Merger" beginning on page 20 and "--Recommendation of
the Board of Directors; Fairness of the Merger" beginning on page 32.
1
- - OPINION OF FINANCIAL ADVISOR. In deciding to approve the terms of the merger
agreement and the merger, one factor the board of directors and the special
committee considered was the opinion of the special committee's financial
advisor, Adams, Harkness & Hill Inc. Adams, Harkness & Hill concluded that the
consideration to be received pursuant to the merger agreement is fair, from a
financial viewpoint, to the Uno stockholders, other than the Continuing
Stockholders. The complete Adams, Harkness & Hill opinion, including applicable
limitations and assumptions, describes the basis for the opinion and is attached
as Exhibit C to this proxy statement. See "Special Factors--Opinion of Financial
Advisor to the Special Committee" beginning on page 53.
- - STOCKHOLDER VOTE. You are being asked to consider and vote upon a proposal to
adopt and approve the merger agreement. Under Delaware law, the merger
agreement must be adopted and approved by the affirmative vote of a majority of
the outstanding shares of our common stock. In addition, the merger is
conditioned upon the adoption and approval of the merger agreement by the
holders of a majority of the outstanding shares of Uno common stock other than
those held by Parent and the Continuing Stockholders. This condition to the
merger may be waived with the approval of Parent, Newco, Uno and the special
committee of the board of directors. A total of 4,195,309 shares of Uno common
stock, or approximately 38% of the total number of issued and outstanding
shares, are held by stockholders other than Parent and the Continuing
Stockholders. See "The Special Meeting--Record Date and Voting Information"
beginning on page 16; and "The Merger Agreement--Conditions to the Merger"
beginning on page 92.
- - VOTING AGREEMENT. The Continuing Stockholders have agreed to vote all of
their shares of Uno common stock in favor of the adoption and approval of the
merger agreement. They hold 6,811,118 shares of common stock or approximately
62% of the total number of issued and outstanding shares of Uno common stock.
See "Special Factors--Interests of the Continuing Stockholders in the Merger"
beginning on page 69.
- - ADDITIONAL INTERESTS OF THE CONTINUING STOCKHOLDERS. The Continuing
Stockholders, through their ownership of Parent, will continue to have an
equity interest in Uno and will participate in any future earnings and growth of
Uno. Certain Continuing Stockholders also will receive cash for some of their
shares of Uno common stock. Mark Spencer and Lisa Cohen will receive $9.75 per
share in cash for 50,000 shares of Uno common stock held by each of them. The
four key executive officers of Uno will receive $9.75 per share in cash for an
aggregate of 43,948 shares held by them. In addition, the Cheryl Spencer
Memorial Foundation, a charitable foundation of which Mr. Spencer is trustee,
will receive $9.75 per share in cash for 221,018 shares of Uno common stock held
by it. The Continuing Stockholders also will enjoy certain benefits in the
merger transaction not enjoyed by Uno's stockholders generally. See "Special
Factors--Interests of the Continuing Stockholders in the Merger" beginning on
page 69.
- - TREATMENT OF STOCK OPTIONS. Uno stock option holders, other than the
Continuing Stockholders who are officers of Uno, will continue as holders of
options to purchase shares of common stock of Uno as the surviving corporation.
After the merger, Uno may, but has not decided to, offer to repurchase and
cancel outstanding stock options of Uno as the surviving corporation. Most of
the options to purchase shares of Uno common stock held by the Continuing
Stockholders who are officers of Uno will be cancelled, and the Continuing
Stockholders who are officers of Uno will receive options to purchase preferred
stock in Parent. See "Special Factors--Interests of the Continuing Stockholders
in the Merger" beginning on page 69; and "The Merger Agreement--Treatment of
Stock Options" beginning on page 88.
- - MERGER FINANCING. Uno, Parent and Newco estimate that $47.0 million will be
necessary to complete the merger and pay related fees and expenses. Uno,
Parent and Newco expect this amount to be funded through a combination of new
senior credit facilities in the amount of $75 million with a syndicate of banks
led by Fleet National Bank and SunTrust Bank and sales and leasebacks of a
2
portfolio of Pizzeria Uno Chicago Bar & Grill restaurants and related properties
in the amount of approximately $37 million. These financings will also be used
for working capital and to refinance Uno's existing $55 million senior credit
facility. See "Special Factors--Merger Financing" beginning on page 76.
- - CONDITIONS. The merger is subject to the satisfaction of numerous conditions,
including the receipt of the financing described above and no material adverse
change in Uno or Mr. Spencer's health. See "The Merger Agreement--Conditions to
the Merger" beginning on page 92 for a discussion of additional conditions to
the merger.
- - TERMINATION OF THE MERGER AGREEMENT. The parties may agree to terminate the
merger agreement at any time before the merger. In addition, the merger
agreement may be terminated for a number of other reasons. See "The Merger
Agreement--Termination of the Merger Agreement" beginning on page 94.
- - TAX CONSEQUENCES. Generally, the merger will be taxable for U.S. federal
income tax purposes. You will recognize taxable gain or loss in the amount of
the difference between $9.75 and your adjusted tax basis for each share of Uno
common stock that you own. The Continuing Stockholders will have different tax
consequences from the merger. See "Special Factors--Federal Income Tax
Consequences" beginning on page 81.
- - AFTER THE MERGER. Upon completion of the merger, Uno as the surviving
corporation will be a privately held corporation, wholly owned by Parent.
There will be no public market for shares of Uno common stock and the shares of
common stock will cease to be traded on the New York Stock Exchange. See
"Special Factors--Effects of the Merger" beginning on page 67 and "--Interests
of the Continuing Stockholders in the Merger" beginning on page 69.
3
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I BEING ASKED TO VOTE UPON? (see page 15)
A: You are being asked to consider and vote upon a proposal to adopt and
approve the merger agreement. Under the merger agreement, Newco will be merged
with and into Uno, with Uno as the surviving corporation. Newco is a newly
formed Delaware corporation, wholly owned by Parent. Parent is a newly formed
Delaware corporation currently owned by Aaron D. Spencer. If the merger
agreement is adopted and approved by the stockholders and the merger is
completed, Uno will no longer be a publicly held corporation. Mr. Spencer, Mark
Spencer, Lisa Cohen and Uno Associates (collectively referred to as the "Spencer
Group"), and four key executive officers of Uno, Craig S. Miller, Paul W.
MacPhail, Alan M. Fox and Robert M. Vincent (collectively referred to as the
"Management Group"), will indirectly, through their ownership of Parent, own all
of the equity interest in Uno as the surviving corporation. The Spencer Group
and the Management Group are collectively referred to in this proxy statement as
the "Continuing Stockholders."
Q: WHAT WILL I RECEIVE IN THE MERGER? (see page 15)
A: Upon completion of the merger, each issued and outstanding share of Uno
common stock, other than those shares held by Parent, will be converted into the
right to receive $9.75 in cash, without interest.
Q: WHAT KIND OF PREMIUM TO THE PRICE OF UNO COMMON STOCK IS IMPLIED BY THE
MERGER CONSIDERATION? (see page 34)
A: The merger consideration represents a (i) premium of approximately 33.4%
over the $7.31 closing sale price for Uno's common stock as traded on the New
York Stock Exchange on October 24, 2000, the last trading day before Uno
announced the Continuing Stockholders' initial offer to take Uno private by
purchasing all of the outstanding shares of common stock at a price of $8.75 per
share, (ii) a premium of approximately 52.8% over the average closing sale price
per share of $6.38 during the one week preceding the initial announcement to
take Uno private, and (iii) a premium of approximately % over the $ closing
sale price for Uno's common stock as traded on the New York Stock Exchange on
June , 2001.
Q: WHAT WILL HAPPEN TO MY STOCK OPTIONS? (see pages 73 and 88)
A: The holders of options to purchase shares of Uno common stock held by
individuals other than Mr. Spencer and the Management Group will continue as
holders of options to purchase shares of common stock of Uno as the surviving
corporation. After the merger, Uno may, but has not yet decided to, offer to
repurchase and cancel the outstanding stock options of Uno as the surviving
corporation. If it does, Mr. Miller intends to sell to Uno options to purchase
approximately 82,500 shares of his Uno common stock. In the event that Uno
decides not to repurchase the outstanding options, or if Uno does offer to do
so, but a holder chooses not to accept the offer, option holders who, after the
merger, choose to exercise their options to acquire shares of Uno common stock
will be limited as to how they may dispose of their shares. Upon completion of
the merger, Uno will apply to terminate the registration of its common stock
under the Securities Exchange Act of 1934, as amended, and if such application
is accepted, Uno will no longer be subject to the reporting requirements of that
Act. Because there will not be current information regarding Uno available to
the general public, option holders who exercise their options will be required
to hold their shares for a minimum of two years before they may sell them
pursuant to Rule 144(k) of the Securities Act of 1933. In addition, because Uno
will be a privately held corporation after the merger, and its shares will not
be regularly traded in the public market, it will be difficult for any option
holder who exercises his or her options to sell the shares acquired.
4
Q: WHY WAS THE SPECIAL COMMITTEE FORMED? (see page 69)
A: The Continuing Stockholders will indirectly, through their ownership of
Parent, own all of the outstanding shares of Uno common stock immediately
following completion of the merger. Accordingly, our board of directors believed
that a special committee of independent directors who are not officers or
employees of Uno and who have no financial interest in the merger different from
Uno stockholders generally, other than as Uno stock option holders, should be
formed to evaluate, negotiate and, if appropriate, recommend the merger and the
terms of the merger agreement.
Q: WHY IS THE BOARD OF DIRECTORS RECOMMENDING THAT I VOTE IN FAVOR OF THE
MERGER AGREEMENT? (see page 32)
A: Based in part upon the unanimous recommendation of the special committee,
the board of directors of Uno determined that the terms of the merger agreement
and the merger are fair to, and in the best interests of, Uno stockholders other
than the Continuing Stockholders. The board of directors, based in part on the
unanimous recommendation of the special committee, recommends that you vote for
the adoption and approval of the merger agreement. Mr. Spencer, Craig S. Miller
and Paul W. MacPhail abstained from the determination of the board of directors.
Q: WHAT ARE THE CONSEQUENCES OF THE MERGER TO PRESENT MEMBERS OF MANAGEMENT AND
THE BOARD OF DIRECTORS? (see page 70)
A: It is expected that, in general, all members of Uno's current management
will continue as management of Uno as the surviving corporation. In addition, it
is expected that Mr. Spencer, Craig S. Miller, Paul W. MacPhail, Alan M. Fox and
Robert M. Vincent will be the only directors of Uno as the surviving
corporation. The members of the special committee and James F. Carlin, each of
whom is currently a non-employee director of Uno, will not serve as directors or
executive officers of Uno as the surviving corporation. Like all other Uno
stockholders, members of management and the board of directors will be entitled
to receive $9.75 per share in cash for each of their shares of Uno common stock,
other than the shares that the Spencer Group will contribute to Parent in
exchange for equity interests in Parent. Options held by management and the
board of directors of Uno (other than Mr. Spencer and the Management Group) will
continue as options to purchase shares of common stock of Uno as the surviving
corporation. Options held by Mr. Spencer and members of the Management Group
will be cancelled, and Mr. Spencer and the Management Group will receive options
to purchase an equity interest in Parent. Immediately following completion of
the merger, the Continuing Stockholders will own 100% of the equity interest in
Parent and Parent will own 100% of the outstanding common stock of Uno as the
surviving corporation. In addition, Parent may, but has not yet decided to,
issue options to purchase shares of preferred stock in Parent to additional key
employees of Uno upon the cancellation of their options to purchase shares of
Uno common stock.
Q: IS THE MERGER SUBJECT TO THE SATISFACTION OF ANY CONDITIONS? (see page 92)
A: Yes. Before completion of the merger, a number of closing conditions must be
satisfied or waived. A condition to the obligations of each party to complete
the merger is the requirement that the merger agreement be adopted and approved
by a majority of the outstanding shares of Uno common stock held by persons
other than the Continuing Stockholders. This condition only can be waived by all
parties (requiring, in the case of Uno's waiver, the approval of the special
committee). The conditions to the obligations of Parent and Newco to complete
the merger, which can only be waived by Parent and Newco, include, among others,
obtaining all financing necessary to complete the merger, obtaining necessary
governmental and third party consents and approvals, the accuracy of Uno's
representations and warranties, Uno's compliance in all material respects with
its obligations under the merger agreement, the exercise of appraisal rights by
the holders of not more than 5% of the outstanding shares of Uno common stock,
the absence of a material adverse change in Uno's business, the absence
5
of claims which would prevent the completion of the merger, and the absence of a
material adverse change in the health of Mr. Spencer. The conditions to the
obligations of Uno to complete the merger, which can only be waived by Uno with
the written approval of the special committee, include the compliance in all
material respects by Parent and Newco with its respective obligations under the
merger agreement, the receipt of a bring down fairness opinion of Adams,
Harkness & Hill and the absence of any claims which would prevent the completion
of the merger.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED? (see page 87)
A: Uno, Parent and Newco are working toward completing the merger as quickly as
possible. If the merger agreement is adopted and approved and the other
conditions to the merger are satisfied or waived, the merger is expected to be
completed promptly after the special meeting.
Q: CAN THE MERGER AGREEMENT BE TERMINATED PRIOR TO THE COMPLETION OF THE
MERGER? (see page 94)
A: Yes. The parties may agree to terminate the merger agreement at any time
before the merger is completed. In addition, the merger agreement may be
terminated if:
- by either Parent or Uno if the merger is not completed on or before
September 30, 2001;
- by Parent if the Uno board of directors or the special committee withdraws
or modifies its recommendation in a manner adverse to Parent or Newco or
publicly takes a position materially inconsistent with its approval or
recommendation of the merger, or the Uno board of directors or the special
committee approves, endorses or recommends another acquisition proposal;
- by the non-breaching party if the other party breaches any of its
representations, warranties or covenants in the merger agreement;
- by either Parent or Uno in the event a claim, action, suit or
investigation is threatened or instituted that could reasonably be
expected to prevent or rescind the merger or have a material adverse
effect on Uno or Parent;
- by either Parent or Uno if a court or governmental authority issues a
non-appealable final order, decree or ruling or takes any other action
which permanently restrains, enjoins or prohibits the merger; or
- by Uno if Uno receives an acquisition proposal that the special committee
concludes, based on the advice of a nationally recognized investment
banking firm, is a superior proposal and the special committee determines
in good faith, in consultation with outside counsel, that it is advisable
to accept the new acquisition proposal in order to comply with its
fiduciary duties.
Q. WHAT HAPPENS IF THE MERGER AGREEMENT IS TERMINATED PRIOR TO THE COMPLETION
OF THE MERGER? (see page 95)
A. Generally, if the merger agreement is terminated, other than for the reasons
described below, there will be no liability on the part of Uno, Parent or Newco
or any of their affiliates, directors, officers, employers or stockholders.
However, no party will be relieved from liability for willful breaches of the
merger agreement. Prior to the execution of the merger agreement, Uno separately
agreed to reimburse $100,000 of the expenses of the Continuing Stockholders
incurred prior to March 1, 2001 in connection with their going private proposal
regardless of whether the merger agreement is terminated. In the event the
merger agreement is terminated for one of the reasons described below, Uno will
be required to reimburse Parent and Newco for one of the following amounts
depending on the reason why the merger agreement is terminated. First, if the
reason for the termination of the merger agreement is not within the reasonable
control of the stockholders of Parent, Uno must reimburse Parent for up to an
additional $500,000 of Parent's and Newco's reasonable expenses. Second, Uno
will
6
reimburse up to $1,500,000 of Parent's and Newco's expenses if the merger
agreement is terminated because (1) the special committee or the board of
directors fails to recommend approval of the merger agreement or modifies its
recommendation in a manner adverse to Parent or Newco, (2) a claim or suit is
threatened or instituted that could prevent or rescind the merger or have a
material adverse effect on Uno or Parent or (3) the special committee discusses
a proposal by a third party to acquire more than 10% and less than 50% of the
outstanding common stock of Uno, the third party acquires shares of Uno's common
stock and the merger agreement is not approved by the holders of a majority of
the shares of common stock held by stockholders other than the Continuing
Stockholders at the special meeting. Finally, in the event that the merger
agreement is terminated by Uno because the special committee accepts a superior
proposal, Uno will pay Parent a termination fee of $1,500,000 and will reimburse
up to $1,500,000 of Parent's and Newco's expenses.
Q: WHAT WILL HAPPEN TO THE MARKET FOR UNO'S COMMON STOCK AFTER THE MERGER? (see
page 67)
A: At the effective time of the merger, trading in Uno's common stock on the
New York Stock Exchange will cease and there will no longer be a public market
for Uno's common stock. Price quotations for Uno's common stock will no longer
be available and the registration of Uno's common stock under the Securities
Exchange Act of 1934, as amended, will be terminated.
Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER? (see
page 81)
A: The receipt of cash for shares of Uno common stock in the merger will be a
taxable transaction for U.S. federal income tax purposes and also may be a
taxable transaction under applicable state, local, foreign or other tax laws.
Generally, you will recognize gain or loss equal to the difference between $9.75
per share and your tax basis for the shares of common stock that you owned
immediately before completion of the merger. For U.S. federal income tax
purposes, this gain or loss generally will be a capital gain or loss if you held
the shares of common stock as a capital asset.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO YOU
WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU ARE URGED TO CONSULT YOUR
OWN TAX ADVISOR WITH RESPECT TO YOUR OWN INDIVIDUAL TAX CONSEQUENCES AS A RESULT
OF THE MERGER.
Q: WHEN AND WHERE IS THE SPECIAL MEETING? (see page 15)
A: The special meeting of Uno stockholders will be held at 10:00 a.m. local
time on , 2001, at , located at .
Q: WHO CAN VOTE ON THE MERGER AGREEMENT? (see page 16)
A: Holders of Uno common stock at the close of business on , 2001, the
record date for the special meeting, may vote in person or by proxy at the
special meeting.
Q: WHAT VOTE IS REQUIRED TO ADOPT AND APPROVE THE MERGER AGREEMENT? (see
page 16)
A: The merger agreement must be adopted and approved by the affirmative vote of
at least a majority of the outstanding shares of Uno common stock. The
Continuing Stockholders have agreed to vote their shares of Uno common stock in
favor of the adoption and approval of the merger agreement unless the board of
directors or the special committee withdraws its recommendation of the merger or
if the merger agreement is terminated. The Continuing Stockholders hold
6,811,118 shares of Uno common stock, constituting 62% of the total number of
issued and outstanding shares. The affirmative vote of the shares held by the
Continuing Stockholders is sufficient under Delaware law to adopt and approve
the merger agreement. In order to give the unaffiliated stockholders a vote on
the merger agreement, although not required by the Delaware General Corporation
Law, Uno's restated certificate of incorporation, as amended, or Uno's amended
and restated bylaws, the merger agreement requires
7
that a majority of the shares held by stockholders other than the Continuing
Stockholders adopt and approve the merger agreement. This requirement may be
waived with the approval of Parent, Newco, Uno and the special committee of the
board of directors. In the event a majority of the shares held by stockholders
other than the Continuing Stockholders do not adopt and approve the merger
agreement and this requirement is not waived, the merger will not be completed
and the merger agreement will be terminated. The stockholders other than the
Continuing Stockholders hold a total of 4,195,309 shares of Uno common stock.
Q: WHAT DO I NEED TO DO NOW? (see page 15)
A: You should read this proxy statement carefully, including the exhibits
accompanying this proxy statement and the documents incorporated by reference
into this proxy statement, and consider how the merger affects you. Then, please
mark your vote on your proxy card and date, sign and mail it in the enclosed,
postage paid return envelope as soon as possible so that your shares can be
voted at the special meeting.
Q: WHAT HAPPENS IF I DO NOT RETURN A PROXY CARD? (see page 16)
A: The failure to return your proxy card will have the same effect as voting
against the merger agreement.
Q: MAY I VOTE IN PERSON? (see page 17)
A: Yes. You may attend the special meeting of Uno stockholders and vote your
shares in person whether or not you sign and return your proxy card. If your
shares are held of record by a broker, bank or other nominee and you wish to
vote at the meeting, you must obtain a proxy from the broker, bank or other
nominee.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD? (see
page 17)
A: Yes. You may change your vote at any time before your proxy card is voted at
the special meeting. You can do this in one of three ways. First, you can send a
written notice to the Secretary of Uno at Uno's executive offices located at 100
Charles Park Road, West Roxbury, MA 02132, stating that you would like to revoke
your proxy. Second, you can complete and submit a new proxy card. Third, you can
attend the meeting and vote in person. Your attendance alone will not revoke
your proxy. If you have instructed a broker to vote your shares, you must follow
the directions you receive from your broker to change those instructions.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME? (see page 16)
A: No. Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares by following the
procedures provided to you by your broker.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW? (see page 17)
A: No. After the merger is completed, you will receive written instructions for
exchanging your shares of Uno common stock for a cash payment of $9.75 per
share, without interest.
Q: DO I HAVE A RIGHT TO SEEK AN APPRAISAL OF MY SHARES? (see pages 17 and
83-86)
A: Yes. If you wish, you may seek an appraisal of the fair value of your
shares, but only if you comply with all requirements of Delaware law as
described on pages 83 through 86 and in Exhibit B of this proxy statement. Based
on the determination of the Delaware Court of Chancery, the appraised fair
8
value of your shares of Uno common stock, which will be paid to you if you seek
an appraisal, may be more than, less than or equal to the $9.75 per share to be
paid in the merger.
Q: IS THERE ANY LITIGATION CHALLENGING THE MERGER? (see page 86)
A: Yes. On October 25, 2000, Bruce Cox filed a class action complaint in the
Court of Chancery of the State of Delaware for New Castle County against Uno,
Mr. Spencer and each of the current directors of Uno. The complaint alleges that
the directors breached their fiduciary duties to the plaintiff because
Mr. Spencer and certain members of senior management of Uno timed a proposed
acquisition of the outstanding shares of Uno in order to freeze out Uno's public
stockholders and to capture for themselves Uno's future potential without paying
an adequate or fair price to Uno's public stockholders. The plaintiff seeks to
have the action maintained as a class action, to have the defendants enjoined
from proceeding with or closing the proposed transaction and to recover
unspecified costs of the action. The class is alleged to include all public
shareholders of Uno, excluding the defendants and their affiliates. Uno has
filed a motion to dismiss on the basis of ripeness and intends to defend
vigorously against the complaint.
Q: WHO CAN HELP ANSWER MY QUESTIONS? (see page 99)
A: The information provided above in question and answer format is for your
convenience only and is merely a summary of the information contained in this
proxy statement. You should carefully read this entire proxy statement,
including the exhibits and the documents incorporated by reference. If you would
like additional copies, without charge, of this proxy statement or if you have
questions about the merger, including the procedures for voting your shares, you
should contact:
Uno Restaurant Corporation
100 Charles Park Road
West Roxbury, MA 02132
Telephone: (617) 323-9200
Attn: George W. Herz II, Secretary
9
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement includes and incorporates by reference statements that
are not historical facts. These forward-looking statements are based on Uno's
current estimates and assumptions and, as such, involve uncertainty and risk.
Forward-looking statements include the information concerning Uno's possible or
assumed future results of operations and also include those preceded or followed
by the words "anticipates," "believes," "could," "estimates," "expects,"
"intends," "may," "should," "plans," "targets" and/or similar expressions.
The forward-looking statements are not guarantees of future performance, and
actual results may differ materially from those contemplated by these
forward-looking statements. In addition to the factors discussed elsewhere in
this proxy statement, other factors that could cause actual results to differ
materially include changes in the cost of food and labor, the performance of any
restaurants, particularly new restaurants, adverse weather conditions, the
effect of health and regulatory developments, the loss of key personnel,
competitive factors, potential liabilities associated with long-term leases,
changes in consumer tastes and eating habits, Uno's ability to execute its
business strategy, fluctuations in inventory and general and administrative
expenses, and general economic conditions, especially economic conditions in the
areas in which Uno's restaurants are concentrated. In addition, Uno's plans for
new restaurant locations and timing of openings depend upon, among other things,
the negotiation of acceptable lease or purchase terms, timely project
development and restaurant construction, obtaining appropriate regulatory and
governmental permits and approvals, management of costs, and the hiring,
training and retraining of skilled management. These and other factors are
discussed in the documents that are incorporated by reference into this proxy
statement. Except to the extent required under the federal securities laws, Uno
does not intend to update or revise the forward-looking statements to reflect
circumstances arising after the date of the preparation of the forward-looking
statements. Uno is not entitled to rely on the safe harbor protection of the
Private Securities Litigation Reform Act of 1995 with respect to the
forward-looking statements contained in this proxy statement.
10
UNO RESTAURANT CORPORATION SELECTED HISTORICAL FINANCIAL DATA
Uno's selected historical financial data presented below as of and for the
five fiscal years ended October 1, 2000 are derived from the audited
consolidated financial statements of Uno and its subsidiaries. Data as of and
for the twenty-six week periods ended April 2, 2000 and April 1, 2001 have been
derived from unaudited consolidated financial statements of Uno. Interim
operating results are not necessarily indicative of the results that may be
achieved for the entire year. The following selected historical financial data
should be read in conjunction with Uno's most recent Annual Report on Form 10-K
and Quarterly Report on Form 10-Q, which are incorporated by reference in, and
accompany, this proxy statement.
TWENTY-SIX
FISCAL YEAR ENDED WEEKS ENDED
---------------------------------------------------- -------------------
SEPT. 29 SEPT. 28 SEPT. 27 OCT. 3 OCT. 1 APRIL 2 APRIL 1
1996 1997 1998 1999 2000 2000 2001
-------- -------- -------- -------- -------- -------- --------
(53 WEEKS)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
REVENUES
Restaurant sales.................................. $159,581 $164,389 $177,343 $198,560 $213,715 $99,529 $113,711
Consumer product sales............................ 8,351 9,115 9,384 10,568 11,772 5,630 6,086
Franchise income.................................. 4,209 4,516 4,549 5,105 5,683 2,648 2,907
-------- -------- -------- -------- -------- ------- --------
172,141 178,020 191,276 214,233 231,170 107,807 122,704
COSTS AND EXPENSES
Cost of food and beverages........................ 44,064 43,994 48,567 54,683 57,679 26,971 31,004
Labor and benefits................................ 51,868 54,183 58,139 64,700 70,922 33,296 39,363
Occupancy costs................................... 26,339 27,045 27,988 29,199 30,974 14,962 17,484
Other operating costs............................. 14,323 15,244 17,148 17,739 19,468 8,928 10,408
General and administrative........................ 12,155 13,384 13,661 16,629 19,521 8,510 9,983
Depreciation and amortization..................... 12,964 12,469 12,183 12,702 13,098 6,494 6,888
Pre-opening costs................................. 1,567 823 938 594 2,137 868 587
Special charges................................... 3,937 4,000 -- -- 8,588 -- --
-------- -------- -------- -------- -------- ------- --------
167,217 171,142 178,624 196,246 222,387 100,029 115,717
-------- -------- -------- -------- -------- ------- --------
OPERATING INCOME.................................... 4,924 6,878 12,652 17,987 8,783 7,778 6,987
INTEREST AND OTHER EXPENSE.......................... 2,481 2,827 3,661 3,139 3,019 1,382 2,097
-------- -------- -------- -------- -------- ------- --------
INCOME BEFORE INCOME TAXES.......................... 2,443 4,051 8,991 14,848 5,764 6,396 4,890
Provision for income taxes.......................... 757 1,378 2,968 5,048 1,729 2,175 1,675
-------- -------- -------- -------- -------- ------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE.............................. 1,686 2,673 6,023 9,800 4,035 4,221 3,215
Cumulative effect of change in accounting principle
for pre-opening costs, net of income tax benefit
of $313........................................... -- -- 636 -- -- -- --
-------- -------- -------- -------- -------- ------- --------
NET INCOME.......................................... $ 1,686 $ 2,673 $ 5,387 $ 9,800 $ 4,035 $ 4,221 $ 3,215
======== ======== ======== ======== ======== ======= ========
NET INCOME PER COMMON SHARE:
Income before cumulative effect of change in
accounting principle.............................. $ 0.12 $ 0.20 $ 0.50 $ 0.87 $ 0.36 $ 0.37 $ 0.29
Cumulative effect of change in accounting
principle......................................... -- -- (0.05) -- -- -- --
-------- -------- -------- -------- -------- ------- --------
Basic net income per common share................... $ 0.12 $ 0.20 $ 0.45 $ 0.87 $ 0.36 $ 0.37 $ 0.29
======== ======== ======== ======== ======== ======= ========
Diluted net income per common share................. $ 0.12 $ 0.20 $ 0.45 $ 0.84 $ 0.34 $ 0.35 $ 0.28
======== ======== ======== ======== ======== ======= ========
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic............................................. 13,963 13,146 11,960 11,313 11,162 11,303 10,987
======== ======== ======== ======== ======== ======= ========
Diluted........................................... 14,032 13,209 12,025 11,610 11,844 12,077 11,286
======== ======== ======== ======== ======== ======= ========
Certain amounts in prior fiscal years have been reclassified to permit
comparison.
11
Franchised restaurants that have been upgraded and redesigned to conform
with, or opened as, Uno's Pizzeria Uno ... Chicago Bar & Grill concept are
included in the table below for all periods presented. Franchised restaurants
that have not been upgraded and redesigned are included under the caption
"Other" for all periods presented. The information under average annual
restaurant sales and comparable restaurant sales change, under the caption
"Other", only includes those franchised restaurants that have not been upgraded
and redesigned. The table does not include quick-service units, Uno's Su Casa
Mexican restaurant in Chicago or Uno's former Bay Street Grill restaurants.
TWENTY-SIX
FISCAL YEAR ENDED WEEKS ENDED
------------------------------------------------------ -------------------
SEPT. 29 SEPT. 28 SEPT. 27 OCT. 3 OCT. 1 APRIL 2 APRIL 1
1996 1997 1998 1999 2000 2000 2001
-------- -------- -------- ---------- -------- -------- --------
(53 WEEKS)
(AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF RESTAURANTS
AND PER SHARE DATA)
OPERATING DATA:
NUMBER OF RESTAURANTS
FULL-SERVICE PIZZERIA UNO ... CHICAGO BAR & GRILL
Company-owned............................... 86 92 94 98 110 103 112
Franchised.................................. 35 39 42 47 55 52 61
OTHER
Company-owned............................... 6 5 3 1 1 1 1
Franchised.................................. 32 30 24 18 13 16 12
-------- -------- -------- -------- -------- -------- --------
TOTAL AT END OF PERIOD...................... 159 166 163 164 179 172 186
======== ======== ======== ======== ======== ======== ========
SYSTEM-WIDE RESTAURANT SALES
FULL-SERVICE PIZZERIA UNO ... CHICAGO BAR & GRILL
Company-owned............................... $151,178 $160,045 $174,716 $196,353 $211,626 $ 50,039 $ 57,890
Franchised.................................. 60,816 68,861 75,338 92,447 104,564 25,305 30,285
OTHER
Company-owned............................... 8,403 4,344 2,627 2,207 1,723 343 347
Franchised.................................. 35,273 33,986 30,212 25,687 16,648 4,070 3,105
-------- -------- -------- -------- -------- -------- --------
TOTAL....................................... $255,670 $267,236 $282,893 $316,694 $334,561 $ 79,757 $ 91,627
======== ======== ======== ======== ======== ======== ========
AVERAGE ANNUAL RESTAURANT SALES
FULL-SERVICE PIZZERIA UNO ... CHICAGO BAR & GRILL
Company-owned............................... $ 1,846 $ 1,818 $ 1,854 $ 1,972 $ 2,052 -- --
Franchised.................................. 1,819 1,858 1,881 2,002 2,071 -- --
OTHER
Franchised.................................. 1,223 1,199 1,207 1,132 1,297 -- --
COMPARABLE RESTAURANT SALES CHANGE
FULL-SERVICE PIZZERIA UNO ... CHICAGO BAR & GRILL
Company-owned............................... (1.3)% (1.7)% 1.3% 6.1% 3.0% 3.5% 3.8%
Franchised.................................. (1.1)% 0.7% 1.8% 5.0% 1.9% 2.1% 0.4%
OTHER
Franchised.................................. (1.0)% (2.9)% (5.1)% (5.5)% (1.8)% (3.9)% (3.1)%
BALANCE SHEET DATA:
Total assets................................ $135,065 $143,732 $143,195 $149,612 $168,476 $159,729 $172,391
Long-term debt, net of current portion...... 37,085 42,516 38,676 31,612 50,900 41,774 51,773
Capital lease obligations, net of current
portion................................... 1,056 867 666 489 453 454 451
Treasury stock.............................. 10,653 19,877 22,616 26,826 33,237 31,002 33,237
Total shareholders' equity.................. 77,136 70,880 73,669 80,979 81,714 82,786 85,148
The book value per share of Uno common stock as of April 1, 2001 was $7.63
per share. The ratio of earnings to fixed charges for the fiscal years ended
October 3, 1999 and October 1, 2000 and for the fiscal quarter ended April 1,
2001 was 5.25, 2.43 and 3.28, respectively.
12
MARKET AND MARKET PRICE
MARKET INFORMATION
Uno's common stock is listed on the New York Stock Exchange under the symbol
"UNO." The table below sets forth the range of high and low sales prices on the
New York Stock Exchange for the period from September 28, 1998 to June 4, 2001,
adjusted for a 10% stock dividend declared on November 30, 1999 and paid on
December 23, 1999 to stockholders of record on December 13, 1999:
COMMON STOCK PRICE
-------------------
HIGH LOW
-------- --------
FISCAL YEAR ENDED OCTOBER 3, 1999
First Quarter........................................... $ 6.648 $5.284
Second Quarter.......................................... $ 7.614 $6.136
Third Quarter........................................... $ 7.955 $6.250
Fourth Quarter.......................................... $13.466 $8.011
FISCAL YEAR ENDED OCTOBER 1, 2000
First Quarter........................................... $11.125 $9.602
Second Quarter.......................................... $12.563 $9.563
Third Quarter........................................... $12.438 $9.875
Fourth Quarter.......................................... $12.625 $6.625
FISCAL YEAR ENDING SEPTEMBER 30, 2001
First Quarter........................................... $ 8.500 $6.063
Second Quarter.......................................... $ 9.450 $8.000
Third Quarter (through June 4, 2001).................... $ 9.500 $8.800
------- ------
The closing sale price for shares of Uno's common stock on the New York
Stock Exchange on October 24, 2000, the last trading day before Uno announced
the Continuing Stockholders' initial offer to take Uno private by purchasing all
of the outstanding shares of common stock at a price of $8.75 per share, was
$7.31 per share. The average closing sale price per share of Uno common stock
was $6.38 during the one week preceding the initial announcement to take Uno
private. The closing sale price per share of Uno common stock on February 27,
2001, the last trading day before Uno announced the agreement with the
Continuing Stockholders to take Uno private at $9.75 per share, was $8.00 per
share. On April 19, 2001, the last full trading day before the public
announcement of the signing of the merger agreement, the high and low sales
prices of Uno common stock as reported on the New York Stock Exchange were $9.42
and $9.38 per share, respectively, and the closing sale price on that date was
$9.38 per share. On June 4, 2001, the last practicable trading day for which
information was available prior to the date of the first mailing of this proxy
statement, the closing price per share of Uno common stock as reported on the
New York Stock Exchange was $9.40. Stockholders should obtain a current market
quotation for Uno common stock before making any decision with respect to the
merger.
NUMBER OF STOCKHOLDERS
As of June 4, 2001, there were issued and outstanding 11,006,427 shares of
Uno common stock and approximately 1,812 beneficial owners of Uno's common
stock.
DIVIDENDS
Uno has never declared or paid cash dividends on its common stock and does
not plan to pay any cash dividends in the foreseeable future. Uno's current
policy is to retain all of its earnings to finance its future development and
growth. Uno may reconsider this policy from time to time in light of
13
conditions then existing, including its earnings performance, financial
condition and capital requirements. Uno is subject to various financial and
operating covenants, including limitations on the payment of cash dividends
under its $55 million credit facility.
Uno will be subject to financial and operating covenants, including
limitations on the payment of cash dividends, under the proposed $75 million
credit facility anticipated to provide part of the financing for the merger and
refinancing of Uno's current $55 million credit facility. See "Special
Factors--Merger Financing" beginning on page 76.
On November 30, 1999, Uno's board of directors declared a 10% stock dividend
on the outstanding shares of common stock. The stock dividend was paid on
December 23, 1999 to stockholders of records as of December 13, 1999.
14
THE SPECIAL MEETING
GENERAL
This proxy statement is being furnished to Uno stockholders as part of the
solicitation of proxies by the Uno board of directors for use at the special
meeting of stockholders to be held at on , 2001, beginning
at 10:00 a.m. local time, and at any adjournments or postponements thereof. This
proxy statement is accompanied by a form of proxy for use at the special
meeting.
At the special meeting, the stockholders will be asked to consider and vote
upon a proposal to adopt and approve the Agreement and Plan of Merger, dated as
of April 19, 2001, among Uno, Uno Restaurant Holdings Corporation, a Delaware
corporation ("Parent") and Uno Acquisition Corp., a Delaware corporation
("Newco"), pursuant to which Newco will be merged with and into Uno, with Uno
being the surviving corporation.
This proxy statement and the accompanying form of proxy are being mailed to
stockholders on or about June , 2001.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the special meeting, the stockholders will be asked to consider and vote
upon a proposal to adopt and approve the merger agreement. If the requisite
votes in favor of the proposal are obtained and certain other conditions are
satisfied or, where permissible, waived, Newco will be merged with and into Uno
with Uno being the surviving corporation. At the effective time of the merger,
each share of common stock of Uno issued and outstanding immediately prior to
the filing of a certificate of merger with the Secretary of State of the State
of Delaware will be converted into the right to receive $9.75 in cash, without
interest, except for:
- shares of Uno common stock held by Parent, which will be converted into an
equal number of shares of the surviving corporation;
- shares for which appraisal rights have been perfected properly under
Section 262 of the Delaware General Corporation Law, which will be
entitled to receive the consideration provided for by the Delaware General
Corporation Law; and
- shares held by Uno in treasury, which will be canceled without payment.
Like all other Uno stockholders, members of management (including the
Management Group) and the board of directors will be entitled to receive $9.75
per share in cash for each of their shares of Uno common stock held by them at
the time of the merger. Options to purchase shares of Uno common stock, other
than options held by Mr. Spencer and the Management Group, will continue as
options to purchase shares of common stock of Uno as the surviving corporation.
After the merger, Uno may, but has not yet decided to, offer to repurchase and
cancel outstanding stock options of Uno as the surviving corporation. If it
does, Mr. Miller intends to sell to Uno options to purchase approximately 82,500
shares of his Uno common stock. Options held by Mr. Spencer and the remaining
options held by the Management Group will be cancelled and Mr. Spencer and the
Management Group will receive options to purchase shares of preferred stock of
Parent. In addition, Parent may, but has not yet decided to, issue options to
purchase shares of preferred stock of Parent to additional key employees of Uno
upon the cancellation of their options to purchase shares of Uno common stock.
Immediately prior to the merger, Mr. Spencer, Mark Spencer, Lisa Cohen and
Uno Associates will contribute substantially all of their shares of Uno common
stock to Parent in exchange for shares of preferred stock of Parent. Mark
Spencer and Lisa Cohen will each retain 50,000 shares of Uno common stock and
will be entitled to receive $9.75 per share in cash for the 50,000 shares of Uno
common stock retained by each of them. The Management Group will be entitled to
receive $9.75 per share in cash for an aggregate of 43,948 shares held by them.
In addition, 221,018 shares held by the Cheryl Spencer Memorial Foundation, a
charitable foundation of which Mr. Spencer is trustee, will not be exchanged for
an equity interest in Parent and will be entitled to receive $9.75 per share.
15
Uno does not expect a vote to be taken at the special meeting on any matter
other than the proposal to adopt and approve the merger agreement and, if
necessary, a vote to adjourn or postpone the meeting. However, if any other
matters are properly presented at the special meeting for consideration, the
holders of the proxies will have discretion to vote on these matters in
accordance with their best judgment. Uno is soliciting proxies to grant
discretionary authority to vote in favor of adjournment or postponement of the
special meeting.
RECORD DATE AND VOTING INFORMATION
Only holders of record of common stock at the close of business on ,
2001 will be entitled to notice of and to vote at the special meeting. At the
close of business on , 2001, there were outstanding and entitled to vote
shares of Uno common stock. A list of the Uno stockholders will be
available for review at Uno's executive offices during regular business hours
for a period of 10 days before the special meeting. Each holder of record of
common stock on the record date will be entitled to one vote for each share
held.
All votes will be tabulated by the inspector of elections appointed for the
special meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Brokers who hold shares in street name for
clients typically have the authority to vote on "routine" proposals when they
have not received instructions from beneficial owners. However, absent specific
instructions from the beneficial owner of the shares, brokers are not allowed to
exercise their voting discretion with respect to the adoption and approval of
non-routine matters, such as the merger agreement. Proxies submitted without a
vote by the brokers on these matters are referred to as "broker non-votes."
Abstentions and broker non-votes are counted for purposes of determining whether
a quorum exists at the special meeting.
The affirmative vote of a majority of the outstanding shares of common stock
entitled to vote at the special meeting is required to adopt and approve the
merger agreement. The Continuing Stockholders have agreed to vote all of the
shares of Uno common stock held by them, aggregating 6,811,118 shares, for
adoption and approval of the merger agreement. The shares of Uno common stock
held by the Continuing Stockholders constituted 62% of the total number of
shares outstanding on the record date. In addition, although not required by the
Delaware General Corporation Law, Uno's restated certificate of incorporation,
as amended, or Uno's amended and restated bylaws, the merger agreement requires
the affirmative vote of a majority of shares of common stock held by
stockholders other than the Continuing Stockholders. This requirement may be
waived with the approval of Parent, Newco, Uno and the special committee of the
board of directors. The stockholders other than the Continuing Stockholders held
4,195,309 shares of Uno common stock as of the record date.
Because the affirmative vote of a majority of all outstanding shares of Uno
common stock as well as a majority of the outstanding shares of Uno common stock
held by stockholders other than the Continuing Stockholders is required in order
to approve the merger agreement, abstentions and broker non-votes will have the
same effect as votes "AGAINST" adoption and approval of the merger agreement.
With the exception of broker non-votes, the treatment of which is discussed
above, each share of Uno common stock represented by a proxy properly executed
and received by Uno in time to be voted at the special meeting and not revoked
will be voted in accordance with the instructions indicated on such proxy and,
if no instructions are indicated, will be voted "FOR" the proposal to adopt and
approve the merger agreement. All proxies "FOR" such matter, including proxies
on which no instructions are indicated, other than broker non-votes, may, at the
discretion of the proxy holder, be voted "FOR" discretionary authority to vote
in favor of any motion to adjourn or postpone the special meeting to another
time and/or place for the purpose of soliciting additional proxies or otherwise.
Any proxy that is voted against discretionary authority to vote in favor of any
motion to adjourn or postpone the special meeting will not be voted in favor of
any such adjournment or postponement.
16
QUORUM
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Uno common stock entitled to vote at the special meeting
is necessary to constitute a quorum for the transaction of business at the
special meeting.
PROXIES; REVOCATION
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of Uno at Uno's executive offices located at 100 Charles Park Road,
West Roxbury, MA 02132, a written notice of revocation or a duly executed proxy
bearing a later date, or it may be revoked by attending the special meeting and
voting in person. Attendance at the special meeting will not, by itself, revoke
a proxy. Furthermore, if a stockholder's shares are held of record by a broker,
bank or other nominee and the stockholder wishes to vote at the meeting, the
stockholder must obtain a proxy from the record holder.
EXPENSES OF PROXY SOLICITATION
Uno will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of common stock beneficially owned by
others for forwarding to these beneficial owners. Uno may reimburse persons
representing beneficial owners of common stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of Uno. No
additional compensation will be paid to directors, officers or other regular
employees for their services.
ADJOURNMENTS
Although it is not expected, the special meeting may be adjourned for the
purpose of soliciting additional proxies. Any adjournment of the special meeting
may be made without notice, other than by an announcement made at the special
meeting, by approval of the holders of a majority of the outstanding shares of
Uno common stock present in person or represented by proxy at the special
meeting, whether or not a quorum exists. Uno is soliciting proxies to grant
discretionary authority in favor of adjournment or postponement of the special
meeting. In particular, discretionary authority may be exercised if the purpose
of the adjournment or postponement is to provide additional time to solicit
additional votes to adopt and approve the merger agreement and the merger. The
Continuing Stockholders who hold a majority of the shares of Uno will be
entitled to control a vote to adjourn or postpone the meeting for the purpose of
soliciting additional proxies from the other stockholders of Uno to obtain
majority approval to adopt and approve the merger agreement. The Continuing
Stockholders will vote to adjourn or postpone the meeting depending upon the
circumstances at the time. It is likely that the Continuing Stockholders will
vote to adjourn or postpone the meeting if they believe that they will be able
to obtain the additional votes necessary to obtain approval by the holders of a
majority of the shares of Uno common stock held by persons other than the
Continuing Stockholders to adopt and approve the merger agreement. It is
unlikely that the Continuing Stockholders will vote to adjourn or postpone the
meeting if they do not believe that they will be able to obtain the additional
necessary votes.
APPRAISAL RIGHTS
Stockholders who do not vote in favor of adoption and approval of the merger
agreement, and who otherwise comply with the applicable statutory procedures of
the Delaware General Corporation Law summarized elsewhere in this proxy
statement, will be entitled to seek appraisal of the value of their Uno common
stock as set forth in Section 262 of the Delaware General Corporation Law. See
"Special Factors--Appraisal Rights."
PLEASE DO NOT SEND IN STOCK CERTIFICATES AT THIS TIME. IN THE EVENT THE
MERGER IS COMPLETED, UNO WILL DISTRIBUTE INSTRUCTIONS REGARDING THE PROCEDURES
FOR EXCHANGING UNO STOCK CERTIFICATES FOR THE $9.75 PER SHARE CASH PAYMENT.
17
THE PARTICIPANTS
UNO RESTAURANT CORPORATION
100 Charles Park Road
West Roxbury, Massachusetts 02132
(617) 323-9200
Uno Restaurant Corporation owns and operates 113 and franchises 67 casual
dining, full-service restaurants operating primarily under the name Pizzeria Uno
... Chicago Bar & Grill. The restaurants feature Uno's signature Chicago-style,
deep-dish pizza and a selection of baked, grilled and sauteed entrees, including
gourmet thin crust pizza, pasta, fajitas, ribs, steak and chicken, as well as a
variety of appetizers, salads, sandwiches and desserts. Company-owned
restaurants are located primarily in major metropolitan markets from New England
to Virginia, as well as Florida, Chicago and Denver, and franchised restaurants
are located throughout the United States and Puerto Rico as well as Seoul, South
Korea, Lahor, Pakistan and Dubai, United Arab Emirates. Uno also operates a
consumer products business that distributes Uno's branded and non-branded,
Chicago-style deep-dish pizza, calzones, and other pizza products in hotels,
movie theater chains, supermarkets, food courts and airports.
A more detailed description of Uno's business is contained in Uno's most
recent Annual Report on Form 10-K, which is incorporated by reference into and
accompanies this proxy statement. See also "Where Stockholders Can Find More
Information." Information about the directors and executive officers of Uno is
set forth in Exhibit D to this proxy statement.
UNO RESTAURANT HOLDINGS CORPORATION
100 Charles Park Road
West Roxbury, Massachusetts 02132
(617) 323-9200
Parent is Uno Restaurant Holdings Corporation, a newly organized Delaware
corporation formed and currently owned by Aaron D. Spencer. The stockholders of
Parent immediately following the merger will be Mr. Spencer, Mr. Spencer's two
adult children, Mark Spencer and Lisa Cohen, Uno Associates, a general
partnership owned 80% by Mr. Spencer and 10% by each of Mark Spencer and Lisa
Cohen (collectively, the "Spencer Group"), and four key executive officers of
Uno, Craig S. Miller, Paul W. MacPhail, Alan M. Fox and Robert M. Vincent
(collectively, the "Management Group"). The Spencer Group and the Management
Group are collectively referred to in this proxy statement as the "Continuing
Stockholders." The Spencer Group will own preferred stock of Parent. The
Management Group will own shares of common stock of Parent or options to
purchase shares of common stock of Parent. Mr. Spencer and Management Group will
hold options to purchase shares of preferred stock of Parent. Information about
the directors and executive officers of Parent is set forth in Exhibit D to this
proxy statement.
UNO ACQUISITION CORP.
100 Charles Park Road
West Roxbury, Massachusetts 02132
(617) 323-9200
Newco is Uno Acquisition Corp., a newly organized Delaware corporation
formed and wholly owned by Uno Restaurant Holdings Corporation. Newco was formed
solely for the purpose of engaging in the transactions contemplated by the
merger agreement. Information about the directors and executive officers of
Newco is set forth in Exhibit D to this proxy statement.
18
THE CONTINUING STOCKHOLDERS
Immediately prior to the merger, Aaron D. Spencer and Uno Associates will
contribute their shares of Uno common stock to Parent in exchange for shares of
preferred stock of Parent. Immediately prior to the merger, Mark Spencer and
Lisa Cohen will contribute all of their shares of Uno common stock in exchange
for shares of preferred stock of Parent other than an aggregate of 50,000 shares
of Uno common stock held by each of them, which will be converted into the right
to receive $9.75 per share in cash, without interest. In addition, the
Management Group will purchase shares of common stock of Parent for nominal
consideration or will receive options to purchase shares of common stock of
Parent and, with Mr. Spencer, will cancel their options to purchase shares of
Uno common stock and receive options to purchase shares of preferred stock of
Parent, with the exception of Mr. Miller, who intends to sell to Uno as the
surviving corporation options to purchase approximately 82,500 shares of Uno
common stock in the event that Uno as the surviving corporation offers to
repurchase and cancel outstanding options of Uno. Immediately following the
merger, the Continuing Stockholders will hold, indirectly through their
ownership of Parent, 100% of the outstanding shares of common stock of Uno as
the surviving corporation. The Continuing Stockholders have interests that are
different from, or in addition to, your interests as an Uno stockholder
generally. See "Special Factors--Interests of the Continuing Stockholders in the
Merger." Information about the Continuing Stockholders is set forth in
Exhibit D to this proxy statement.
19
SPECIAL FACTORS
BACKGROUND OF THE MERGER
In the opinion of Uno's board of directors and management, Uno's public
market valuation has been constrained due to Uno's small market capitalization,
limited public float, relatively low trading volume, limited research coverage
from securities analysts, and inability to generate the type of rapid revenue
and unit growth generally expected by the public equity markets. During the last
several years, various other external factors emerged that the board of
directors and management believe have further constrained Uno's share price
within a very narrow range. These factors included a general weakness in
valuations for public restaurant companies and a dramatic investor shift toward
Internet-related and other high technology companies.
In response to factors limiting Uno's market valuation, the board of
directors authorized Uno to conduct a Dutch Auction tender offer in July 1997,
under which it purchased 1,207,624 shares at a price of $7.00 per share, and
authorized a second Dutch Auction tender offer in September 1998, under which it
purchased 274,721 shares at a price of $7.00 per share. From July 1997 through
June 2000, Uno purchased in the two Dutch Auction tender offers, in open market
and in privately negotiated transactions an aggregate of 3,089,465 shares of
common stock of Uno at prices ranging from $5.875 per share to $10.00 per share,
or a weighted average price of $7.39 per share (all purchases subsequent to
November 30, 1999 reflect the 10% stock dividend discussed below). Uno has not
purchased any shares of its common stock since June 29, 2000.
At a meeting held on February 23, 1999, the board of directors of Uno
received at its request a report from BancBoston Robertson Stephens, an
investment banking firm, analyzing possible strategic options to maximize
stockholder value. Among the options discussed were acquiring other restaurant
concepts and companies to increase the size of Uno, selling Uno, continuing as a
public company and pursuing a going private transaction. After the presentation,
the board of directors discussed the advantages and disadvantages of each option
presented. Mr. Spencer, chairman of Uno, emphasized to the board of directors
that the process of seeking to sell Uno could have a serious detrimental effect
on Uno if the sale was not completed. Also, based upon the information provided
by BancBoston Robertson Stephens, Mr. Spencer emphasized that in his capacity as
the majority stockholder of Uno he would not anticipate the range of prices
likely to be offered for Uno to be acceptable to him. He suggested, instead,
that the board of directors entertain a proposal from Mr. Spencer and
unspecified members of management to take Uno private at a price of $10.00 per
share ($9.09 after giving effect to a subsequent 10% stock dividend).
Mr. Spencer concluded that a going private transaction would benefit the public
stockholders and would address the issues that Uno had to deal with as a public
entity. After being advised by Uno's outside counsel of its duties and
responsibilities, the board of directors advised Mr. Spencer that it would
consider a formal proposal from a management group led by Mr. Spencer and formed
a special committee of the board of directors to consider and respond to any
such proposal. The management group consisted of Mr. Spencer, Craig S. Miller,
Paul W. MacPhail, Alan M. Fox, Robert M. Vincent and Robert M. Brown.
On April 14, 1999, Uno announced that a special committee of independent
directors, composed of James F. Carlin, John T. Gerlach and Stephen J. Sweeney
had been formed to consider available options for enhancing stockholder value
and that the special committee had engaged BancBoston Robertson Stephens to
assist it. Mr. Gerlach was appointed chairman of the special committee. On
April 20, 1999, Mr. Spencer and his management group retained BNY Capital
Markets, Inc. as a financial adviser to assist them with respect to the proposed
going private transaction.
In late April 1999, Mr. Spencer received an unsolicited communication from a
third party expressing an interest in discussing a possible acquisition of Uno
at a price of approximately $14.00 ($12.75 after giving effect to a subsequent
10% stock dividend) per share in cash, subject to due diligence, execution of a
definitive agreement and securing financing. The third party was a direct
20
competitor of Uno. The communication also set forth that the potential price per
share was predicated upon certain stated financial assumptions as of March 31,
1999. The financial assumptions were EBITDA of $30 million, net debt of
$31 million and real estate that could be readily sold for $40 million and
leased back for approximately $3.2 million annually. Each of these assumptions
about Uno were inaccurate. Management believed that if and when the third party
was apprised of its inaccurate assumptions, it would lower its potential price.
Management also did not believe that the third party would be able to finance
successfully the possible transaction. Management reached this conclusion on the
basis of its understanding that the third party already had a significant amount
of debt from a recent acquisition and the assumption identified in the inquiry
relating to the capacity of Uno's real estate to support financing, suggesting
that the third party would finance the acquisition with Uno's real estate.
Management did not believe that Uno's real estate alone could support the
financing necessary for the acquisition. Mr. Spencer discussed the communication
from the third party with Mr. Gerlach. Based upon management's view that the
third party would be unlikely to finance and complete successfully the
transaction as proposed, Mr. Spencer and the special committee decided not to
pursue discussions with the third party. This decision also was based on the
fact that the third party was a direct competitor of Uno, and therefore,
management believed it would be unwise to allow the third party to conduct a due
diligence investigation of Uno when the likelihood of a successful transaction
at $14 per share was suspect.
In late May 1999, Mr. Spencer concluded and advised the board of directors
that Mr. Spencer and his management group did not want to proceed with a going
private transaction and decided to turn their efforts toward maximizing
stockholder value by remaining a public company and refocusing Uno's efforts on
accelerating expansion of new restaurants. The special committee then terminated
the engagement of its financial advisor and Mr. Spencer and his management group
terminated the engagement of their financial advisor.
In May 1999, Uno's business fundamentals were strong. Based upon activities
of other restaurant companies, Mr. Spencer and his management group believed
that the capital markets might be receptive to an equity offering by Uno.
Additionally, several institutional research analysts suggested to management
that they would commence research coverage of Uno. Consequently, Mr. Spencer and
his management group decided not to proceed with a going private transaction,
but rather to pursue a growth strategy which included raising capital in a
public offering of common stock.
On September 9, 1999, Uno filed a registration statement with the Securities
and Exchange Commission for the underwritten public offering of two million
shares of common stock of Uno, of which one million shares were to be sold by
Uno, 900,000 shares were to be sold by Mr. Spencer and 100,000 shares were to be
sold by the Cheryl Spencer Memorial Foundation, a charitable foundation of which
Mr. Spencer is the trustee. Uno could not complete the public offering because
of a deterioration in the public markets generally. Subsequently, on
October 18, 1999, Uno announced that it was withdrawing this offering.
On November 30, 1999, Uno declared a 10% stock dividend on shares of Uno
common stock. The stock dividend was paid on December 23, 1999 to stockholders
of record as of December 13, 1999.
On August 31, 2000, Uno announced earnings below analyst expectations and
recorded a pre-tax charge of $8.6 million related to asset impairment and store
closing costs. Following these announcements the public trading price of Uno's
common stock declined. Specifically, on August 31, 2000, the closing sale price
of Uno's common stock was $9.688 per share and on September 1, 2000, the closing
sale price of Uno's common stock was $8.125 per share.
At a meeting of the board of directors on October 6, 2000, Mr. Spencer
advised the board of directors that he and members of management consisting of
Craig S. Miller, Robert M. Brown, Alan M. Fox and Robert M. Vincent again wanted
to pursue a going private transaction. Mr. Brown ceased to be a member of this
management group in March 2001 and Paul W. MacPhail joined the
21
Management Group on October 20, 2000. Mr. Spencer expressed the view that
because of Uno's size and liquidity, Uno's intrinsic value would never be fully
recognized by the public trading markets, citing as support that prior to the
September 2000 earnings announcement Uno's common stock price had not reflected
Uno's strong operating performance. He also briefly described his plans to
finance the transaction and the unsuccessful public offering in September and
October of 1999. After receiving advice from Uno's outside counsel as to its
duties and responsibilities, the board of directors appointed a special
committee, composed of five independent directors, Tamara P. Davis, James J.
Kerasiotes, John T. Gerlach, Kenneth D. Hill and James F. Carlin (Mr. Carlin
later resigned from the special committee because scheduling conflicts prevented
his attendance at meetings), and authorized it to engage a financial advisor and
separate counsel. The special committee appointed Ms. Davis chairman of the
special committee. On October 17, 2000, the special committee retained the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden, Arps") to act as its
legal advisor.
On October 16, 2000, Mr. Spencer, on behalf of the Continuing Stockholders,
stated in writing to Tamara P. Davis, on behalf of the special committee, the
intention of the Continuing Stockholders to make a tender offer, subject to
receipt of financing, for all of the outstanding shares of Uno common stock not
owned by the Continuing Stockholders at a price which represented a premium to
the current market price for the shares. The closing price of Uno's common stock
on the New York Stock Exchange on October 13, 2000 (the previous trading day)
was $6.375. Because the Continuing Stockholders believed that their efforts
would result in the ability of Uno's public stockholders to receive an
attractive price for their shares but that there could be no assurance that a
transaction could be completed, the Continuing Stockholders requested, as a
condition of making any proposal, that Uno reimburse under all circumstances
their out-of-pocket expenses in connection with formulating and implementing the
contemplated offer.
On October 18, 2000, the special committee proposed that it would reimburse
$100,000 of expenses only if a transaction approved by the special committee was
successfully completed. The Continuing Stockholders replied to the special
committee on October 20, 2000 reiterating their desire to proceed with a
transaction that would offer the public stockholders a price for their shares
that the Continuing Stockholders believed would be fair. The Continuing
Stockholders stated again that they would require reimbursement of their
expenses as a condition to proceeding with a transaction but proposed that
reimbursement at this point could be capped at $100,000 and should be limited to
those expenses incurred with respect to discussions with the special committee
to determine a fair price.
A telephonic meeting of the board of directors was held on October 24, 2000.
In addition to the members of the board of directors, attending the meeting were
Robert M. Vincent, Chief Financial Officer of Uno; Constantine Alexander, Esq.,
of Nutter, McClennen & Fish, LLP ("Nutter, McClennen"), counsel to the
Continuing Stockholders; and representatives of Skadden, Arps. Mr. Spencer gave
a preliminary status report regarding the continued interest of the Continuing
Stockholders in pursuing a going private transaction. He reviewed the status of
his discussions with the various possible sources of financing being considered
for the going private transaction. Mr. Spencer then distributed a letter and a
draft press release containing a description of the Continuing Stockholders'
proposal and reported that he believed financing could be obtained. The proposal
stated that an entity to be funded by the Continuing Stockholders would make a
cash tender offer for all shares of Uno common stock not owned by the Continuing
Stockholders at a price of $8.75 per share. The offer was conditioned upon
receipt of financing, ownership of at least 90% of Uno's outstanding shares of
common stock upon completion of the tender offer and other conditions.
At this board meeting, the board of directors approved new indemnification
agreements for all directors and certain officers who are not also directors, as
well as the compensation to be paid to members of the special committee for
their service on the special committee. The terms of the indemnification
agreements, which are not materially different from the indemnification
agreements
22
previously executed by the directors and executive officers, are described under
the heading "--Interests of the Continuing Stockholders in the Merger;
Indemnification."
The board of directors determined that each member of the special committee
would receive $1,000 for each special committee meeting attended, regardless of
whether any proposed transaction was entered into or completed. The board of
directors also determined that Ms. Tamara P. Davis, chairman of the special
committee, would receive an additional $15,000 fee for the first 100 hours of
her time spent in connection with the performance of her responsibilities and
duties as chairman of the special committee. Thereafter, Ms. Davis would receive
$150 per hour.
Immediately following the meeting of the board of directors, the special
committee met with its legal counsel and Messrs. Spencer, Miller, Vincent and
Alexander at the offices of Skadden, Arps in Boston. After discussing the
Continuing Stockholders' proposal, Messrs. Spencer, Miller, Vincent and
Alexander left the meeting and the special committee discussed the Continuing
Stockholders' proposal in detail. After full consideration, the special
committee approved the Continuing Stockholders' request for reimbursement of up
to $100,000 of expenses in order to increase the likelihood that the Continuing
Stockholders would submit a definitive proposal that would be beneficial to
stockholders. The special committee also approved a press release announcing the
formation of the special committee and the Continuing Stockholders' proposal for
a management led buyout of Uno's public stockholders at a price of $8.75 per
share in cash.
On October 25, 2000, Uno issued a press release announcing the Continuing
Stockholders' proposed $8.75 per share tender offer. It read, in part, as
follows:
Boston, Massachusetts, October 25, 2000--Uno Restaurant Corporation
(NYSE:UNO) announced today that Aaron D. Spencer, chairman and principal
stockholder, and certain members of senior management have submitted a
proposal to Uno's board of directors to acquire all of the outstanding
shares of common stock currently not owned by them, which represents
approximately 38% of Uno's outstanding shares of common stock. This proposal
contemplates a cash tender offer price of $8.75 per share. The proposal
states that any offer will be subject to a number of conditions, including
receipt of financing on terms satisfactory to the offeror and ownership by
the offeror of at least 90% of the company's outstanding shares following
the purchase of shares pursuant to the tender offer.
The board has appointed a special committee of outside directors led by
Tamara P. Davis to conduct a review of the proposal. Uno does not plan to
make any further public comment regarding the proposal other than to
announce whether or not a transaction will proceed. There can be no
assurance that the proposal will lead to the commencement of any tender
offer.
During the following week, the special committee interviewed several
investment banking firms to act as its independent financial advisor. After full
consideration of relevant factors, including the advisor's (i) experience and
knowledge of Uno's industry and the markets it operates in, (ii) experience with
transactions of the type being contemplated, (iii) the lack of any previous
business relationship with Uno or Mr. Spencer and (iv) the structure and amount
of compensation to be paid to the advisor, the special committee selected Adams,
Harkness & Hill, Inc. and authorized Adams, Harkness & Hill to begin a financial
review of Uno.
On November 29, 2000, the special committee met with its financial advisor
at the offices of Uno in West Roxbury. Also present by telephone were
representatives of Skadden, Arps. At the request of the special committee,
representatives of Adams, Harkness & Hill reviewed their firm's preliminary work
and financial analysis of the proposal by the Continuing Stockholders. That work
included a review of historical and projected operating results and related
business and financial information of Uno as developed by management, and the
application of several analytical methodologies to that data. The
representatives of Adams, Harkness & Hill then reviewed with the special
committee their
23
summary of preliminary work and analysis and, responded to numerous questions by
the special committee. Adams, Harkness & Hill also informed the special
committee that at this early point in the discussion of a transaction, its work
was preliminary and it was not yet in a position to deliver a written report to
the special committee. See "--Opinion of Financial Advisor to the Special
Committee" for a detailed description of the final analysis performed.
Upon the completion of the Adams, Harkness & Hill presentation and following
a full discussion, the special committee concluded that Ms. Davis should report
to the board of directors that, based on a review of information received to
date, the special committee had determined that it would need more information
from Uno, including any and all financial information that had been provided to
other third parties and Mr. Spencer's financing sources, in order to evaluate
fully the proposal and that such information should be delivered to the special
committee and its financial and legal advisors. While the special committee
expected that it would seek to negotiate for a substantially higher price, it
also determined that it did not want to discourage an offer at $8.75 per share,
or foreclose the possibility of the special committee recommending to the public
stockholders an offer at $8.75 per share, because the tender offer proposed by
the Continuing Stockholders at $8.75 per share might ultimately prove to be the
best option available to Uno.
Adams, Harkness & Hill met with members of the Management Group and
Mr. Spencer on November 30, 2000 and on December 7, 2000. Ms. Davis attended the
meeting with management on November 30, 2000, but did not attend the meeting
with management on December 7, 2000. At the meeting on November 30, 2000,
Ms. Davis reported to Mr. Spencer and the Management Group that the special
committee wanted to solicit the interest of a limited number of strategic and
financial parties to make a competing acquisition proposal. Ms. Davis encouraged
Mr. Spencer to consider such a potential third party transaction. Mr. Spencer
indicated that he would consider transactions involving a third party sale of
Uno and approved of the proposed solicitation of interest as long as the special
committee and its advisors conducted their discussions in a confidential manner.
Adams, Harkness & Hill recommended that the special committee perform a
market test to elicit interest in Uno beyond the interest expressed by
Mr. Spencer and the Management Group. The special committee approached
Mr. Spencer with the concept of a market test and he agreed that it was
appropriate with certain conditions. He urged the special committee to limit the
market test to ten potential acquirors to be identified by Adams, Harkness &
Hill so that management and employees would not be distracted by numerous
inquiries and potential press coverage that might have a negative impact on the
operations of Uno. Adams, Harkness & Hill submitted to the special committee a
list of potential strategic and financial acquirors that it deemed potentially
would have the most interest in and ability to complete a transaction with Uno.
The special committee advised Mr. Spencer that it would be contacting ten
entities (six potential strategic buyers and four potential financial buyers).
Adams, Harkness & Hill selected the entities to contact based on their ability
to complete a transaction of this size and their expertise and experience in the
restaurant industry.
On December 1, 2000, the board of directors met by telephone and authorized
the special committee to conduct a confidential market test. Later that day, the
special committee met by telephone with its legal counsel and financial advisors
and authorized Adams, Harkness & Hill to conduct a confidential market test. On
December 18, 2000, Adams, Harkness & Hill commenced a confidential market test
to determine whether there was any third-party interest in acquiring all the
shares of Uno common stock at a price higher than that proposed by the
Continuing Stockholders.
Between December 18, 2000 and January 4, 2001, Adams, Harkness & Hill
contacted six national restaurant chains as potential strategic buyers and four
financial investors as potential financial buyers. When contacted, these parties
were informed that Adams, Harkness & Hill was acting on behalf of the special
committee of a publicly traded restaurant company that was contacting a limited
list of potential buyers and that if they were interested in pursuing a
transaction, a non-disclosure agreement would be
24
sent naming and describing Uno. Of the six strategic investors contacted, none
had an interest in pursuing the opportunity and no information was sent. Of the
four financial investors, three expressed an interest in a transaction with
Mr. Spencer. These interested parties signed the non-disclosure agreement and
were sent an information package. The information package contained only
publicly available information. This information consisted of Securities and
Exchange Commission filings, press releases and other publicly available
information. None of these parties expressed further interest at a price higher
than $8.75 per share. However, the three potential financial buyers separately
stated they would only consider being an additional equity participant with the
Continuing Stockholders in the proposed going private transaction and would not
make independent offers.
On January 4, 2001, the special committee met by telephone with its legal
counsel and financial advisors. At the outset of the meeting, Mr. Carlin
resigned from the special committee due to scheduling conflicts that had
prevented him from attending all of the meetings of the special committee.
Mr. Carlin excused himself from the remainder of the meeting. The special
committee's financial advisors then reviewed the substance of their meetings
with Mr. Spencer and members of the Management Group and the results of their
confidential market test. Representatives of Adams, Harkness & Hill reviewed the
state of the capital markets since November 29, 2000 and updated their financial
analysis of the Continuing Stockholders' proposal. Adams, Harkness & Hill
informed the special committee that the availability of financing for going
private transactions was becoming more limited. However, Mr. Spencer's financing
ability appeared strong. In addition, Adams, Harkness & Hill informed the
special committee that Uno's projected EBITDA and cash flow appeared to continue
to support a higher valuation for Uno. Adams, Harkness & Hill concluded that
based upon their financial analysis, the special committee should seek to
increase the per share price offered by the Continuing Stockholders. The special
committee then authorized Ms. Davis, to meet later that day with Adams,
Harkness & Hill, Mr. Spencer and members of the Management Group for the purpose
of negotiating a higher price.
As authorized, later that day, Ms. Davis and the representatives of Adams,
Harkness & Hill met with Mr. Spencer, Mr. Miller, Mr. Vincent and their counsel,
Nutter McClennen. They discussed the results of Adams Harkness & Hill's due
diligence investigation of Uno, Adams Harkness & Hill's analysis of the
restaurant industry, the Continuing Stockholders' offer, the preliminary
financing terms being considered by the Continuing Stockholders and
presentations by Mr. Spencer and the Management Group regarding Uno's operations
and prospects. Ms. Davis and Adams, Harkness & Hill summarized the results of
Adams, Harkness & Hill's market test. Ms. Davis and Adams, Harkness & Hill
explained the view of Adams, Harkness & Hill that the $8.75 per share price
offered by the Continuing Stockholders was not fair to Uno's stockholders from a
financial point of view and that a price in excess of $10.00 per share would be
appropriate. Mr. Spencer asked for time to develop a response.
On January 12, 2001, Ms. Davis and Adams, Harkness & Hill met again with
Mr. Spencer, Mr. Miller, Mr. Vincent and Nutter McClennen. At that meeting,
Mr. Miller made a formal presentation regarding current industry operating
fundamentals, including declining consumer confidence and increased energy and
labor costs, Uno's historical enterprise value and comparable store sales
performance, and transactions involving the acquisition of minority interests.
Mr. Spencer then indicated that capital market uncertainties and the state of
Uno's business would justify a price of less than $8.75 per share if the
Continuing Stockholders were making a new proposal and if the Continuing
Stockholders were making an initial proposal at this time, the Continuing
Stockholders would offer a price of less than $8.75 per share. Nevertheless,
Mr. Spencer stated that the Continuing Stockholders were willing to increase
their offer price to $9.00 per share, and he indicated that they were unwilling
to raise their price higher. Mr. Spencer also stated that the Continuing
Stockholders now desired to proceed by means of a cash merger rather than a cash
tender offer so that most financing commitment fees would be paid upon
completion of the merger and not in advance of a
25
tender offer. Ms. Davis and Adams, Harkness & Hill reiterated that a higher
price was warranted. Furthermore, Ms. Davis reported that the special committee
would require that any proposal would have to be approved by the affirmative
vote of a majority of disinterested stockholders.
On January 15, 2001, the special committee met by telephone with Skadden,
Arps and Adams, Harkness & Hill. Ms. Davis, reported the results of her meetings
with Mr. Spencer and the Management Group. Following this report, the special
committee discussed Uno's latest operating results and various factors
indicating that future operating results might deteriorate, including the
increasing cost of electricity in many of the markets in which Uno operates, as
well as increasing labor costs in tight labor markets. The special committee
also considered declines in the prices of certain restaurant stocks and the
effect on Uno's common stock price if the Continuing Stockholders' proposal were
withdrawn or rejected by the special committee. Adams, Harkness & Hill
representatives reiterated that, on a preliminary study, their financial
analysis still supported a valuation in excess of $9.00 per share. The Adams,
Harkness & Hill representatives then left the meeting and the special
committee's legal counsel answered questions for the special committee about its
fiduciary duties and the applicable fair price, fair process standards. After
further discussion by the special committee and its advisors of Uno's
circumstances and valuation parameters by the special committee and its
advisors, the special committee authorized Ms. Davis to meet with Mr. Spencer to
emphasize that the special committee required a further increase in the proposed
price.
On January 16, 2001, at a meeting with Ms. Davis, the Continuing
Stockholders submitted a revised written offer to the special committee
increasing the offer price to $9.00 per share and changing the structure of the
transaction from a cash tender offer to a cash merger. Further, the revised
proposal required the merger to be approved not only by the holders of a
majority of the outstanding Uno common stock, as required by Delaware law, but
also by the holders of a majority of the shares not owned or controlled by the
Continuing Stockholders. This stockholder approval requirement could be waived
only with the consent of the Continuing Stockholders and the special committee.
The revised offer was also subject to receipt of financing and other conditions
which the Continuing Stockholders regarded as customary. Finally, the revised
offer was subject to the requirement that Uno reimburse the Continuing
Stockholders' expenses in the transaction if the transaction was not completed
for any reason other than a breach of the merger agreement by the entity to be
formed by the Continuing Stockholders for purposes of effecting the merger.
At the January 16, 2001 meeting, Ms. Davis strongly suggested that the
Continuing Stockholders consider additional financing sources for the proposed
going private transaction. The special committee understood at that time that
the Continuing Stockholders had only considered obtaining financing from Fleet
National Bank and SunTrust Bank, Uno's existing senior lenders. The special
committee considered the possibility that debt financing might be available to
the Continuing Stockholders on more favorable terms from another party. The
special committee believed that if the Continuing Stockholders were able to
obtain financing on more favorable terms, the Continuing Stockholders might
offer a higher price for Uno's common stock. Conversely, Mr. Spencer and the
Management Group believed that they had available sufficient financing for the
transaction on favorable terms.
Mr. Spencer then reviewed several topics with Ms. Davis, including
Mr. Spencer's desire to retain and improve current management. Mr. Spencer also
noted that while Uno's current five-year projections could imply a valuation
higher than $9.00 per share, as a result of recent developments in the economy,
there was considerable uncertainty about whether those projections could be met.
Mr. Spencer then stated that the Continuing Stockholders would not increase the
$9.00 per share offer price. Ms. Davis urged the Continuing Stockholders to
increase the price, noting that the public stockholders include employees. She
also emphasized that the special committee firmly believed that a higher price
was justified. Mr. Spencer then indicated that the Continuing Stockholders'
$9.00 per share offer price was not negotiable.
26
On January 17, 2001, the special committee met by telephone with its legal
counsel and financial advisors. The special committee first considered the
information received from the Continuing Stockholders detailing the terms of
their proposed financing for the transaction. Ms. Davis then reported on her
meeting with Mr. Spencer and the Continuing Stockholders' revised offer
stipulating a cash merger at $9.00 per share.
Next, the special committee discussed at length the present circumstances
surrounding the Continuing Stockholders' offer, including indications of a
deterioration of the capital markets, indications that Uno's performance might
be less than earlier anticipated and the fact that the confidential market test
conducted by Adams, Harkness & Hill did not generate any third-party interest in
pursuing an acquisition of Uno.
The special committee then asked Adams, Harkness & Hill to assess the
Continuing Stockholders' offer at $9.00 per share and asked Adams, Harkness &
Hill whether the proposed financial terms were fair to Uno's public
stockholders. The special committee then asked Skadden, Arps to assess the
proposed closing conditions contained in Mr. Spencer's letter. Based on the
information provided by Adams, Harkness & Hill and Skadden, Arps, the special
committee could then assess all the facts, circumstances, proposed terms and
conditions and decide how to proceed.
From January 16 to January 30, 2001, members of the special committee and
the Continuing Stockholders discussed the revised offer several times by
telephone. During these discussions, the special committee refused to accept the
revised offer and asked that the price be raised to at least $10.00 per share.
During the period of these discussions, Mr. Spencer reported to the special
committee that he had been contacted by a financial buyout firm, which was one
of the four potential financial buyers contacted by Adams, Harkness & Hill
during its confidential market test. In a letter addressed to Mr. Spencer, the
financial buyout firm expressed a willingness only to join in the Continuing
Stockholders' offer and if the price to be paid for the public stockholders'
shares was in the range of $8.75 per share to $9.25 per share. Mr. Spencer
immediately delivered a copy of the letter to the special committee. Because
this party was only interested in participating in Mr. Spencer's offer, the
special committee did not have additional contact with this financial buyout
firm. (Following the February 28, 2001 board meeting, the day on which the
Continuing Stockholders tentatively agreed to take Uno private at $9.75 per
share, the financial buyout firm indicated to Mr. Spencer that it was not
interested in participating in a transaction at $9.75 per share.)
On January 29, 2001, the special committee met with its financial advisors
and legal counsel at the offices of Adams, Harkness & Hill in Boston. The
special committee discussed with Skadden, Arps the fact that Adams, Harkness &
Hill could not opine that the proposed $9.00 per share cash merger price would
be fair to the public stockholders from a financial point of view. Skadden, Arps
then advised the special committee as to the legal implications of this fact.
After full discussion, the special committee concluded that it would not proceed
with the Continuing Stockholders' proposal if Adams, Harkness & Hill did not
consider $9.00 per share to be fair to the public stockholders. Representatives
of Adams, Harkness & Hill then joined the meeting.
27
Representatives of Adams, Harkness & Hill presented and reviewed in detail
their analysis of the Continuing Stockholders' proposed $9.00 per share cash
merger price. Their analysis included a review of the trading prices and volume
of shares traded of Uno common stock during the period commencing from
January 1, 1999 through January 26, 2001. The analysis then compared the stock
performance of Uno with the S&P SmallCap Index and the Peer Group for the period
commencing January 1, 2000 through January 26, 2001. Adams, Harkness & Hill also
compared various financial information of the Peer Group with Uno, including
market capitalization, enterprise value, revenues, gross profit, EBITDA, EBIT,
net income and earnings per share. Adams, Harkness & Hill then analyzed
precedent transactions, the premiums paid in such transactions and the multiples
implied by such precedent transactions. The analysis concluded with a review of
discounted cash flow for Uno for the period 2001 through 2005. See "--Opinion of
the Financial Advisor to the Special Committee" for a more detailed description
of the final analysis performed. Representatives of Adams, Harkness & Hill also
responded to many questions from the special committee throughout the
presentation and discussion. The special committee agreed to inform the
Continuing Stockholders that Adams, Harkness & Hill was unable to opine that the
proposed $9.00 per share cash price was fair to Uno's public stockholders from a
financial point of view and, therefore, the special committee would not
recommend the Continuing Stockholders' offer to the board of directors in its
current form.
Later that afternoon on January 29, 2001, Ms. Davis informed Mr. Spencer by
telephone that Adams, Harkness & Hill was not able to opine that the proposed
$9.00 per share cash price was fair to the public stockholders from a financial
point of view. With the Management Group present on the telephone, Mr. Spencer
responded that the Continuing Stockholders were ready to issue a press release
announcing that they were withdrawing their proposed offer. In the alternative,
he was prepared to ask the special committee and Adams, Harkness & Hill if a
$9.50 per share price would be fair to the public stockholders from a financial
point of view. Ms. Davis reported to the special committee that the rejection of
the $9.00 per share price had led to the possibility of a proposed price
increase.
On January 30, 2001, Mr. Vincent telephoned Ms. Davis to inform her that
Uno's management would be revising its projections downward in light of Uno's
first quarter performance and invited her to meet to review such projections
with the Management Group. After conferring with Skadden, Arps, Ms. Davis
responded to Mr. Vincent on January 30, 2001 that if the Continuing Stockholders
had a formal offer to make, they should submit it to the special committee along
with supporting information. The special committee would then consider any such
offers and information.
By letter dated February 1, 2001, Mr. Spencer sent the special committee and
its legal and financial advisors 22 pages of additional material, including
revised projections. In his letter, Mr. Spencer advised the special committee of
certain recent developments that would affect the Continuing Stockholders'
ability to increase their offer price, including changes in the financial credit
markets, a failure in a major franchise relationship, revised franchise
development forecasts and revised financial projections that suggested more
modest performance than previously forecast. The Continuing Stockholders did not
increase the $9.00 per share offer at this time.
On February 5, 2001, the special committee met by telephone with its legal
counsel and financial advisors to consider Mr. Spencer's letter and the events
since the special committee's last meeting on January 29, 2001. Skadden, Arps
first advised the committee as to its duties and responsibilities in light of
the new information from the Continuing Stockholders, and answered questions
from the special committee. After full discussion of its duties and
responsibilities and the new materials from the Continuing Stockholders, the
special committee agreed that Mr. Spencer's February 2, 2001 letter did not
present any meaningful change of circumstance that warranted consideration.
Adams, Harkness & Hill then joined the meeting and informed the special
committee that the new material received with Mr. Spencer's February 2, 2001
letter, when considered in connection with Adams, Harkness & Hill's financial
analysis, increased their confidence that a $9.00 per share price was
28
not in the range of values supported by their financial methodology and did not
provide a basis for a change in opinion.
Ms. Davis then noted that according to Mr. Spencer, the Continuing
Stockholders were prepared to engage Tucker Anthony Incorporated ("Tucker
Anthony") to review the Continuing Stockholders' offer, to assist the Continuing
Stockholders in their discussions and negotiations with the special committee by
preparing financial and industry background information and to assist them in
their analysis of whether or not to revise their offer. Ms. Davis also reported
that the Continuing Stockholders were not going to solicit financial buyers to
join the Continuing Stockholders.
The special committee discussed these developments and determined that if
the Continuing Stockholders chose to add Tucker Anthony as an additional
financial resource to improve the offer price, then that would be welcome; but
if Tucker Anthony were merely to add financial analytical capability, such
additional financial analysis was not needed by the special committee.
The special committee authorized Ms. Davis to inform Mr. Spencer that the
February 2, 2001 materials did not change its conclusion regarding the fairness
of the $9.00 per share price and that additional financial resources would be
welcome, but additional analysis of the $9.00 per share price was not needed or
useful. The Continuing Stockholders retained Tucker Anthony to assist them in
their analysis of whether or not to revise their offer.
Following the meeting, Ms. Davis informed Mr. Spencer of the special
committee's position. Mr. Spencer responded that the Continuing Stockholders
were inclined to issue a press release withdrawing their offer, but that they
would, for the moment, continue evaluating the current situation and consider
whether or not the Continuing Stockholders could revise their offer.
From February 1 through February 24, 2001, there were numerous
communications among the Continuing Stockholders and their representatives and
the special committee and its legal and financial advisors. During this period,
Mr. Spencer orally advised the special committee that the highest price the
Continuing Stockholders were prepared to pay was $9.50 per share. Tucker Anthony
provided Adams, Harkness & Hill with analyses involving direct comparisons with
other minority interest transactions and discussed discounted cash flow and
leveraged buy-out analyses of value. Tucker Anthony believed that these analyses
demonstrated that a price of $9.50 per share would be fair to the public
stockholders from a financial point of view. The special committee responded to
Tucker Anthony because Tucker Anthony had been engaged by the Continuing
Stockholders to provide them with financial advice and, therefore, the special
committee determined that the best way to advance negotiations towards a
beneficial transaction would be to respond to Tucker Anthony's statements. The
special committee's position during this period continued to be that it could
not recommend a price of less than $10.00 per share.
On February 24, 2001, the special committee met by telephone with its legal
counsel and financial advisors. Skadden, Arps informed the special committee
that in separate telephone calls to each of the committee members, Skadden, Arps
had relayed messages from Adams, Harkness & Hill that Adams, Harkness & Hill was
in the process of continuing its financial assessment of the Continuing
Stockholders' stated intent to offer up to $9.50 per share. Adams, Harkness &
Hill reported to the special committee that it had spoken with Tucker Anthony
regarding the fairness of an offer of $9.50 per share. Skadden, Arps reported
that it had discussed with the Continuing Stockholders' counsel Delaware law
concerning the determination of a fair price.
The special committee then discussed the need for Adams, Harkness & Hill to
inform the special committee of its current opinion of whether a $9.50 cash
price was fair to the public stockholders.
Adams, Harkness & Hill then joined the meeting and reviewed their recent
activity. Under their current financial analysis, Adams, Harkness & Hill could
not recommend a $9.50 per share price, but the deterioration in capital markets
and questions about Uno's current store performance required
29
further assessment. Adams, Harkness & Hill informed the special committee that
it would update its analysis for developments in Uno's same store sales growth
figures for the weeks since December 31, 2000 over the upcoming weekend and
respond to the special committee's request for an updated analysis at that time.
Adams, Harkness & Hill did not deliver a written report to the special committee
at this meeting. The special committee agreed to reconvene by telephone on
February 26, 2001.
On February 26, 2001, the special committee met by telephone with its legal
counsel and financial advisors. Adams, Harkness & Hill began by reviewing same
store sales results for the period January 1, 2001 to the present, stating that
they were consistent with management's model. The special committee asked
various questions of Adams, Harkness & Hill, including how Uno's results
compared with those of its competitors during the same period.
The special committee resumed its meeting later that day, and Adams,
Harkness & Hill reported that Uno's recent same store sales growth figures were
consistent with their historic relationship and with comparable companies' same
store sales growth. See "--Opinion of the Financial Advisor to the Special
Committee" for a more detailed description of the final analysis performed.
Adams, Harkness & Hill then responded to additional questions from the special
committee.
After a full discussion of the Adams, Harkness & Hill financial analysis,
the special committee asked Adams, Harkness & Hill to inform it whether, in
light of the updated circumstances, Adams, Harkness & Hill could opine that
$9.50 per share was a fair price. Based on all its work and in light of current
circumstances, Adams, Harkness & Hill reported that a $9.75 per share price
would be fair to the public stockholders, and that, in light of recent same
store sales figures, Adams, Harkness & Hill still could not conclude that $9.50
per share was fair. Adams, Harkness & Hill also noted that the Continuing
Stockholders' term sheet from their prospective lenders continued to limit the
financing to a price not to exceed $10.00 per share, which supported an offer
price higher than $9.50 per share. After further discussion, the special
committee determined to request to meet with Mr. Spencer in person and as the
full special committee prior to Uno's annual meeting of the board of directors
and annual meeting of stockholders on February 28, 2001. At that meeting, the
special committee would inform Mr. Spencer that it could not recommend a $9.50
per share price.
On February 28, 2001, the special committee met with Mr. Spencer before
Uno's board of directors meeting and before Uno's annual meeting of
stockholders. The special committee informed him that it could not recommend a
$9.50 per share price, that Adams, Harkness & Hill did not consider it fair to
the public stockholders, and that the Continuing Stockholders should raise the
price or end discussions. Mr. Spencer stated that the Continuing Stockholders
did not want to propose more than $9.50 per share and excused himself from the
meeting to discuss the special committee's position with the Management Group.
During the board of directors meeting, Mr. Spencer separately asked
Ms. Davis whether the special committee would likely change its mind if the
Continuing Stockholders were to increase their offer. Ms. Davis, without
informing Mr. Spencer whether the special committee would respond favorably to
any lesser price, informed Mr. Spencer that the special committee would not
support any price less than $9.75 per share. Mr. Spencer responded that the
Continuing Stockholders would increase their proposed offer price to $9.75 per
share in cash, subject to certain conditions, including that Uno agree to
reimburse the Continuing Stockholders' expenses in the event that the proposed
transaction did not close.
The special committee accepted the Continuing Stockholders' price of $9.75
per share, but not the expense reimbursement proposal. The special committee
responded with a counter proposal that the Continuing Stockholders' reimbursable
expenses would be capped at $350,000 if the transaction was not completed and
that reimbursement would be made only if the transaction failed to close for
reasons that were outside the control or influence of the Continuing
Stockholders. After further discussion, the special committee increased the
amount of the expense reimbursement to $500,000 and reached
30
agreement with Mr. Spencer on the other conditions of the Continuing
Stockholders' offer. These conditions included the receipt of sufficient
financing and that there be no material adverse change in Uno or any litigation
arising in connection with the transaction.
On February 28, 2001, Uno announced at its annual meeting of stockholders
and issued a press release that the special committee and the Continuing
Stockholders had reached tentative agreement on a going private transaction at a
price of $9.75 per share in cash for all shares of Uno common stock not already
owned by the Continuing Stockholders. The press release stated that the
transaction would proceed as a merger and would be subject to execution of a
definitive merger agreement, approval by Uno's board of directors and
stockholders, including approval by the holders of a majority of the shares not
owned or controlled by the Continuing Stockholders, receipt of financing, and
customary closing conditions.
During March and early April 2001, Mr. Spencer, the Management Group and
Nutter, McClennen, counsel to the Continuing Stockholders, and members of the
special committee and Skadden, Arps, counsel to the special committee, had
lengthy negotiations concerning the definitive merger agreement and related
documents and exchanged numerous drafts of the merger agreement reflecting their
negotiations. During this period, the special committee met with its advisors to
discuss the various drafts in detail and to formulate responses.
On April 2, 2001, the special committee and Skadden, Arps met with
Mr. Spencer, the Management Group and Nutter McClennen to negotiate several
remaining issues in the merger agreement.
On April 3, 2001, numerous issues remained unresolved after further
negotiations, however, the Continuing Stockholders instructed Nutter McClennen
to accept virtually all of the special committees' terms, leaving only three
remaining issues: (i) the capitalization of Parent, (ii) the responsibility for
payment of bank commitment fees for Uno's proposed credit agreement (a portion
of which would be used to fund the merger consideration) and (iii) the
circumstances under which the Continuing Stockholders' expenses would be
reimbursed in the event the merger did not close and the maximum amount to be
reimbursed.
On April 4, 2001, prior to a special meeting of the board of directors, the
special committee met with Skadden, Arps and Adams, Harkness & Hill to review
the latest draft of the merger agreement reflecting the Continuing Stockholders'
proposals to resolve all remaining issues with respect to the proposed merger
transaction and to receive the opinion of Adams, Harkness & Hill. At this
meeting Adams, Harkness & Hill gave a detailed presentation regarding the
financial aspects of the proposed merger agreement. A summary of the
presentation appears under the heading "--Opinion of the Financial Advisor to
the Special Committee." Adams, Harkness & Hill delivered its opinion to the
special committee that the consideration to be received by the stockholders was
fair from a financial point of view. The special committee separately determined
that in return for the agreement that Mr. Spencer would personally fund
one-third of the bank commitment fees, the special committee would accept the
Continuing Stockholders' proposals on capitalization of Parent and the
circumstances under which the Continuing Stockholders' expenses would be
reimbursed in the event the merger did not close and the maximum amount to be
reimbursed. If Mr. Spencer accepted this offer, the special committee determined
that it would approve the draft merger agreement and recommend that the full
board of directors of Uno approve the merger agreement.
The special committee then invited Mr. Spencer to join the meeting and
informed him that it would require him to personally fund one-third of the bank
commitment fees required in connection with the refinancing of Uno's existing
credit facility and the financing for the going private transaction.
Mr. Spencer agreed to the special committee's proposal and the special committee
resolved to approve the draft merger agreement and recommend that the full board
of directors of Uno approve the merger agreement.
31
Following the special committee meeting, the board of directors of Uno met.
Counsel to the special committee, counsel to the Continuing Stockholders and
counsel to Uno were also present. Ms. Davis gave a report of the special
committee and concluded with the special committee's recommendation that the
board of directors approve the merger agreement. Adams, Harkness & Hill then
made a presentation regarding the financial aspects of the proposed merger
agreement. Adams, Harkness & Hill summarized its opinion to the special
committee with respect to the fairness, from a financial point of view, of the
consideration to be received by the public stockholders described under "Opinion
of Financial Advisor to the Special Committee." Skadden, Arps, counsel to the
special committee, and Brown, Rudnick, Freed & Gesmer, counsel to Uno, gave
presentations regarding the legal terms and conditions of the merger agreement.
Lengthy discussion followed each presentation and the financial and legal
advisors answered questions raised by the board of directors.
Following that discussion, the board of directors, based on the presentation
by Adams, Harkness & Hill regarding its opinion to the special committee, the
recommendation of the special committee and on the other factors described
herein under "--Recommendation of the Board of Directors; Fairness of the
Merger," and "Reasons for the Board of Directors Determination" approved the
merger agreement in substantially the form submitted to the board of directors
and authorized the appropriate officers of Uno to execute and deliver final
documents on behalf of Uno. The board of directors also approved the sale and
leaseback transaction with U.S. Realty Advisors, LLC, the sale and leaseback
transactions with Mr. Spencer, amendments to Uno's $55 million credit facility
with Fleet National Bank and SunTrust Bank to permit the sale and leaseback
transactions, and the $75 million credit facility with Fleet National Bank and
SunTrust Bank to replace the existing $55 million credit facility. Mr. Spencer,
Mr. Miller and Mr. MacPhail abstained from the vote approving the merger
agreement and the related matters because they have interests in the merger that
are different from Uno stockholders generally.
From April 4, 2001 to April 19, 2001, Uno completed the schedules to the
merger agreement, and on April 19, 2001, the merger agreement, was executed by
the parties, and Uno issued a press release announcing the signing of the merger
agreement.
RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE MERGER
The special committee of the board of directors has unanimously determined
that the terms of the merger agreement and the merger are fair to, and in the
best interests of, Uno stockholders other than the Continuing Stockholders. The
special committee unanimously recommended to the board of directors that the
merger agreement be adopted and approved. The special committee considered a
number of factors, as more fully described above under "--Background of the
Merger" and as described below under "--Reasons for the Special Committee's
Determination," in making its recommendation. The board of directors, acting in
part upon the recommendation of the special committee, unanimously determined,
with Mr. Spencer, Mr. Miller and Mr. MacPhail abstaining, that the terms of the
merger agreement and the proposed merger are fair to, and in the best interests
of, Uno stockholders other than the Continuing Stockholders. The board of
directors, based in part on the unanimous recommendation of the special
committee, recommends that Uno stockholders vote FOR the adoption and approval
of the merger agreement.
REASONS FOR THE SPECIAL COMMITTEE'S DETERMINATION
In recommending adoption and approval of the merger agreement and the merger
to the board of directors, the special committee considered a number of factors
that they believe supported their recommendation, including:
- the merger will provide Uno stockholders a premium for their shares
compared to the market price of Uno's common stock, as set forth in the
analysis of Adams, Harkness & Hill; the special committee accepted the
analysis of Adams, Harkness & Hill with respect to current and
32
historical prices of Uno's common stock and considered the premium paid in
relation to the current and historical prices; the special committee
concluded that the substantial premium supported its determination to
recommend the transaction;
- the special committee drew on its knowledge of the business, financial
results and prospects of Uno, as well as the special committee's knowledge
of the restaurant industry generally that committee members had developed
in their time as members of the full board of directors of Uno as well as
their outside business experiences; specifically, the special committee
considered the potential for growth through new store openings, and the
views expressed by Adams, Harkness & Hill and management of Uno regarding
the financial condition, results of operations, business and prospects of
Uno, including the prospects of Uno if it were to remain publicly owned;
the special committee concluded that these collective insights about Uno's
prospects supported its determination to recommend the transaction;
- Mr. Spencer's controlling equity interest in Uno would likely deter
potential strategic and financial third party buyers in light of
Mr. Spencer's stated intention that he is not interested in selling his
interest without a premium substantially higher than implied by the $9.75
per share price; the special committee concluded that this deterrent
effect supported its determination to recommend the transaction;
- the special committee's conclusion that because the transaction had been
publicly announced for a long period of time and no additional buyers had
indicated an interest in an alternate transaction and none of the parties
contacted by the special committee had indicated an interest in an
alternate transaction, it was unlikely that any party other than the
Continuing Stockholders, Parent and Newco would propose and complete a
transaction that was more favorable than the merger to Uno and its
stockholders; the special committee concluded that the lack of additional
buyers at a higher price supported its determination to recommend the
transaction;
- the limitations Uno suffered and would likely continue to suffer as a
public company, including its limited trading volume resulting from the
significant ownership interest held by Mr. Spencer and the other
Continuing Stockholders, the lack of institutional sponsorship and
coverage by institutional research analysts, the inability to raise
capital in the public markets to finance further growth and increase the
public float resulting from Uno's inability to generate the type of rapid
revenue and unit growth expected by the public markets, and the expenses
of compliance with the reporting requirements of a public company, all of
which adversely affect the trading market in, and the value of, Uno's
common stock; the special committee concluded that these limitations
imposed on Uno as a public company supported its determination to
recommend the transaction;
- the negotiations with respect to the merger consideration that, among
other things, led to an increase in the Continuing Stockholders' offer
from $8.75 per share of Uno common stock to $9.75 per share of Uno common
stock, and the belief of the members of the special committee that $9.75
per share was the highest price that the Continuing Stockholders would
agree to pay; the opinion of Adams, Harkness & Hill, as discussed below,
provides that, as of the date of such opinion, the $9.75 per share
consideration to be received in the merger is fair from a financial point
of view to the stockholders other than the Continuing Stockholders; the
special committee concluded that its ability to increase the offer and
Adams, Harkness & Hill's opinion both supported its determination to
recommend the transaction;
33
- the $9.75 per share to be paid to stockholders other than Parent in the
merger represents (i) a premium of approximately 33.4% over the $7.13
closing sale price for the shares of common stock on the New York Stock
Exchange on October 24, 2000, the last trading day before Uno announced
the Continuing Stockholders' initial offer to take Uno private by
purchasing all of the outstanding shares of common stock at a price of
$8.75 per share and (ii) a premium of approximately 52.8% over the average
closing sale price per share of $6.38 during the one week preceding the
Continuing Stockholders' initial announcement to take Uno private; the
special committee concluded that the size of the premium supported its
determination to recommend the transaction;
- the presentations of Adams, Harkness & Hill at various special committee
meetings and its final presentation at the April 4, 2001 meeting,
including the opinion of Adams, Harkness & Hill, based on and subject to
the limitations, assumptions and qualifications set forth in its opinion,
as to the fairness, from a financial point of view, of the merger
consideration to the holders of Uno common stock (other than the
Continuing Stockholders); see "Opinion of Financial Advisor to the Special
Committee", and a copy of the opinion of Adams, Harkness & Hill attached
as Exhibit C to the proxy statement; the special committee concluded that
the financial analysis of Adams, Harkness & Hill supported its
determination to recommend the transaction;
- the presentations by Adams, Harkness & Hill regarding management's
earnings projections; Adams, Harkness & Hill advised the special committee
that its discounted cash flow analysis of such projections indicated a
valuation range of $4.57 to $11.54 per share, that the $9.75 price per
share to be paid in the merger is within that range, and that the
discounted cash flow analysis was one of the factors relied upon by Adams,
Harkness & Hill in rendering its fairness opinion; see "--Opinion of
Financial Advisor to the Special Committee"; the special committee
concluded that the financial analysis of Adams, Harkness & Hill supported
its determination to recommend the transaction;
- the financing proposal received by the Continuing Stockholders, Parent and
Newco for the merger from Fleet National Bank and SunTrust Bank, as well
as the planned sales and leaseback transactions with U.S. Realty Advisors,
LLC and with Mr. Spencer, which the special committee believes reasonably
supports the Continuing Stockholders', Parent's and Newco's ability to
meet their financing obligations pursuant to the merger agreement; the
special committee concluded that the viability of Mr. Spencer's financing
for the transaction supported its determination to recommend the
transaction;
- cash will be paid to the Uno stockholders (other than Parent) in the
merger, eliminating any uncertainties in valuing the merger consideration
to be received by the Uno stockholders (other than Parent); the special
committee concluded that the certainty of value provided by the use of
cash consideration supported its determination to recommend the
transaction;
- the merger agreement permits the board of directors to consider
unsolicited competing acquisition proposals that are, or are reasonably
likely to lead to, proposals superior to the merger, as described in "The
Merger Agreement--No Solicitation"; the special committee concluded that
its ability to consider other proposals supported its determination to
recommend the transaction;
- Delaware law entitles Uno stockholders who do not vote in favor of the
merger who file a written objection with Uno to obtain the "fair value" of
their shares and otherwise follow the procedures prescribed by Delaware
law, as determined by a court, if the merger is completed; See
"--Appraisal Rights;" the special committee concluded that the
availability of other remedies for dissatisfied stockholders supported its
determination to recommend the transaction;
34
- the special committee's judgment that it was unlikely for Uno stockholders
to realize in excess of $9.75 per share due to the current and prospective
environment in which Uno operates, and more particularly, the difficulty
that Uno would have in the future competing against larger, more
aggressive competitors with greater capital resources; the special
committee concluded that the unlikely prospects for a higher trading price
for Uno shares if it remained a public company supported its determination
to recommend the transaction; and
- the special committee's judgment, in view of Uno's prospects, as well as
Adams, Harkness & Hill's discussions with a number of possible acquirors,
none of whom expressed an interest to acquire Uno at a price higher than
$9.75 per share, that it was unlikely that one or more strategic or
financial buyers would be willing to pay a price for Uno equal to or
greater than $9.75 per share in cash and that the Continuing Stockholders,
whose approval would be essential to a proposed sale of Uno, might not be
prepared to support a sale of Uno at any price unless substantially higher
than $9.75 per share; the special committee concluded that the lack of
likely higher offers supported its determination to recommend the
transaction.
The special committee also determined that the merger is procedurally fair
because among other things:
- the Uno board of directors established a special committee to consider and
negotiate the merger agreement;
- the special committee was composed of independent directors who are not
officers or employees of Uno and have no financial interest in the merger
different from Uno stockholders generally other than their ownership of
stock options;
- the special committee was given exclusive and unlimited authority to,
among other things, evaluate, negotiate and recommend the terms of any
proposed transactions;
- the special committee retained and received advice from its own
independent legal counsel and financial advisors in evaluating,
negotiating and recommending the terms of the merger agreement;
- Adams, Harkness & Hill rendered an opinion concerning the fairness, from a
financial point of view, of the consideration to be received by the
stockholders (other than the Continuing Stockholders) in the merger;
- the price of $9.75 per share and the other terms and conditions of the
merger agreement resulted from active and lengthy negotiations between the
special committee and its representatives, on the one hand, and the
Continuing Stockholders and their representatives on the other hand;
- under Delaware law, Uno stockholders have a right to demand appraisal of
their shares;
- the special committee and the board of directors required that the merger
agreement be approved by the affirmative vote of the holders of at least a
majority of the shares of Uno common stock held by stockholders other than
the Continuing Stockholders; this requirement is waivable, but only with
the consent of the special committee; the special committee specifically
negotiated its right to approve the waiver of this requirement; and
- neither after public disclosure of the Continuing Stockholders' initial
$8.75 per share proposal on October 25, 2000 nor during the course of
Uno's efforts to find a potential acquiror throughout the month of
December 2000 did any other party express any interest in acquiring Uno at
a valuation exceeding $9.75.
35
The special committee also considered a variety of risks and other
potentially negative factors concerning the merger. All of the material risks
and potentially negative factors considered by the special committee were as
follows:
- the obligation of the Continuing Stockholders, Parent and Newco to
complete the merger is conditioned upon financing being made available to
Parent and Newco, as discussed in "--Merger Financing," and Parent and
Newco may not secure financing for a variety of reasons, including reasons
beyond the control of Uno;
- if the merger is not completed under circumstances further discussed in
"The Merger Agreement--Termination of the Merger Agreement," Uno may be
required to reimburse Parent specified expenses;
- the cash consideration received by a stockholder generally will be taxable
to the stockholder in an amount equal to the excess of $9.75 over the
stockholder's tax basis in the stockholder's shares of Uno common stock;
- the Continuing Stockholders have potential conflicts of interest,
including equity interests and continued employment in Uno as the
surviving corporation; see "--Interests of the Continuing Stockholders in
the Merger"; and
- following the merger, Uno stockholders, other than the Continuing
Stockholders and holders of stock options of Uno as the surviving
corporation will cease to participate in any future earnings growth of Uno
or benefit from any increase in the value of Uno.
The special committee did not consider the 21.9% premium that the merger
consideration represents over the $8.00 per share closing sale price for Uno's
common stock on February 27, 2001, the last trading day prior to the
announcement that the parties had agreed to take Uno private at $9.75 per share,
to be relevant in its determination. The special committee believed that the
price of Uno's common stock on February 27, 2001 already reflected the
October 25, 2000 announcement to take Uno private at $8.75 per share.
The special committee did not ask Uno to attempt to determine the
liquidation value of Uno and gave little consideration to the book value of
Uno's assets of $83,738,000, or $7.63 per share, as of December 31, 2000,
because it believed that those measures of asset value would be considerably
less than the merger consideration of $9.75 per Uno share and Uno's going
concern value. The special committee's belief regarding liquidation value was
based upon their understanding of the restaurant industry and their general
business knowledge that liquidation sales generally result in proceeds
substantially less than the sale of a going concern business. Based upon the
various analyses of value by Adams, Harkness & Hill, the special committee
concluded that the liquidation value and book value were not materially relevant
to the market value of Uno's business. While the special committee reviewed with
Adams, Harkness & Hill its various financial analyses and reviewed with officers
of Uno its historical and projected results, the special committee did not
independently generate its own separate financial analysis of the merger.
In reaching its determination, the special committee did not consider the
purchases made by Uno in the past two years. No Continuing Stockholder made any
purchases of Uno common stock during the last two years other than by way of
exercise of stock options. The special committee did not view the purchases by
Uno during the past two years as relevant to a determination of fairness.
The special committee also did not consider any firm offers of which Uno was
aware during the preceding two years in connection with any proposed transaction
to acquire Uno because, to Uno's knowledge, no such offers had been received.
The special committee was aware that in late April 1999, Mr. Spencer received an
unsolicited communication from a third party expressing an interest in
discussing a possible acquisition of Uno at a price of approximately $14.00
($12.75 after giving effect to
36
a subsequent 10% stock dividend) per share in cash. The inquiry was subject to
due diligence, execution of a definitive agreement and securing financing. The
communication also set forth that the potential price per share was predicated
on certain financial assumptions. As described above in the section entitled
"--Background of the Merger," these assumptions about Uno were inaccurate. The
special committee agreed with management's conclusion at that time that the
third party would be unable to finance the potential transaction and that it
would lower its potential price upon learning of its inaccurate assumptions.
Consequently, the special committee did not consider this as a firm offer. See
"--Background of the Merger."
After considering these factors, the special committee concluded that the
positive factors relating to the merger outweighed the negative factors. Because
of the variety of factors considered, the special committee did not find it
practicable to quantify or otherwise assign relative weights to, and did not
make specific assessments of, the specific factors considered in reaching its
determination. However, individual members of the special committee may have
assigned different weights to various factors. The determination of the special
committee was made after consideration of all of the factors together.
REASONS FOR THE BOARD OF DIRECTORS' DETERMINATION
The board of directors of Uno consists of eight directors, four of whom
serve on the special committee. At the April 4, 2001 meeting of the board of
directors, the special committee, with its legal and financial advisers
participating, reported to the other members of the board of directors on the
course of its negotiations with the Continuing Stockholders, Parent, Newco and
their legal counsel, its review of the merger agreement and the related
financing requirements and the factors it took into account in reaching its
determination that the merger is fair to, and in the best interests of, Uno
stockholders other than the Continuing Stockholders. In view of the wide variety
of factors considered in its evaluation of the merger, the board of directors
did not find it practicable to quantify or otherwise assign relative weights to,
and did not make specific assessments of, the specific factors considered in
reaching its determination. Rather, the board of directors based its position on
the totality of the information presented and considered. In considering the
determination of the special committee, the board of directors believed that the
analysis of the special committee was reasonable and adopted the special
committee's conclusion and the analysis underlying the conclusion.
The board of directors also considered the financial and managerial
resources and future prospects of Parent and Newco. It considered the financial
projections delivered to Adams, Harkness & Hill, Uno's historic ability to
access equity and debt capital, and the ability to continue to attract and
retain management with equity incentives which historically have not proven to
be valuable for Uno's management. The board of directors also considered the
possible effects on the business of Uno and its subsidiaries and on the
employees, customers, suppliers and creditors of Uno and its subsidiaries and
the effects on the community in which Uno's facilities are located.
FAIRNESS OF THE MERGER TO STOCKHOLDERS OTHER THAN THE CONTINUING
STOCKHOLDERS
The board of directors believes that the merger agreement and the merger are
substantively and procedurally fair to, and in the best interests of, Uno
stockholders other than the Continuing Stockholders for all of the reasons set
forth above under "--Recommendation of the Board of Directors; Fairness of the
Merger--Reasons for the Special Committee's Determination" and "--Reasons for
the Board of Directors' Determination." In addition, with respect to procedural
fairness, the board of directors established a special committee, consisting of
four independent directors of Uno, none of whom is an officer or employee of Uno
or has an interest in the merger different from that of Uno stockholders
generally other than as holders of Uno stock options. The merger consideration
of $9.75 in cash per share was the highest price the Continuing Stockholders
indicated they were willing to pay following extensive negotiations between the
special committee and the Continuing Stockholders and their representatives.
37
In reaching these conclusions, the board of directors considered it
significant that:
- no member of the special committee has an interest in the merger different
from that of Uno stockholders generally other than as holders of Uno stock
options; and
- the special committee retained its own financial and legal advisors who
have extensive experience with transactions similar to the merger and who
assisted the special committee in evaluating the merger and in negotiating
with the Continuing Stockholders.
Adams, Harkness & Hill was retained to advise the special committee as to
the fairness, from a financial point of view, of the proposal received from the
Continuing Stockholders, Parent and Newco. Adams, Harkness & Hill reached the
conclusion expressed in its written opinion dated April 4, 2001 that, subject to
the considerations and limitations set forth in the opinion, the merger is fair,
from a financial point of view, to the stockholders of Uno other than the
Continuing Stockholders.
THE BOARD OF DIRECTORS, BASED IN PART ON THE UNANIMOUS RECOMMENDATION OF THE
SPECIAL COMMITTEE, RECOMMENDS THAT UNO STOCKHOLDERS VOTE IN FAVOR OF THE
PROPOSAL TO ADOPT AND APPROVE THE MERGER AGREEMENT. The determination of the
board of directors was made after consideration of all the material factors,
both positive and negative, as described above.
Mr. Spencer, Mr. Miller and Mr. MacPhail, each of whom is a Continuing
Stockholder and a current director of Uno, each abstained from voting on the
proposal to adopt and approve the merger agreement. The remaining five directors
voted unanimously to adopt and approve the merger agreement.
DETERMINATION OF THE FAIRNESS OF THE MERGER BY PARENT, NEWCO AND THE AFFILIATE
STOCKHOLDERS
The rules of the Securities and Exchange Commission require Parent, Newco,
and Mr. Spencer, Uno Associates and the Management Group (the "Affiliate
Stockholders") to express their belief as to the fairness of the merger to the
stockholders (other than the Continuing Stockholders). Parent, Newco and the
Affiliate Stockholders did not participate in the deliberations of the special
committee regarding or receive advice from Adams, Harkness & Hill as to the
fairness to the stockholders of the merger.
Parent, Newco, and the Affiliate Stockholders believe that the merger is
substantively fair to the stockholders of Uno other than the Continuing
Stockholders. Parent, Newco and the Affiliate Stockholders based their belief on
the following factors:
- the current and historical market prices for shares of Uno common stock;
- the fact that the $9.75 per share to be paid to stockholders other than
Parent in the merger represents (i) a premium of approximately 33.4% over
the $7.31 closing sale price for the shares of common stock on the New
York Stock Exchange on October 24, 2000, the last trading day before Uno
announced the Continuing Stockholders' initial offer to take Uno private
by purchasing all of the outstanding shares of common stock at a price of
$8.75 per share, and (ii) a premium of approximately 52.8% over the
average closing sale price per share of $6.38 during the one week
preceding the Continuing Stockholders' initial announcement to take Uno
private;
- the determination of the special committee that the merger is fair to, and
in the best interests of, Uno and the stockholders (other than the
Continuing Stockholders) and the special committee's recommendation that
the stockholders vote to adopt and approve the merger agreement;
- the receipt by and acceptance of the special committee of the Adams,
Harkness & Hill opinion;
38
- the Affiliate Stockholders' knowledge of the business, financial
condition, results of operations and prospects of Uno, and knowledge of
the restaurant industry generally;
- the arm's length nature of the extensive negotiations between the special
committee and the Continuing Stockholders, Parent and Newco;
- the measures taken by the board of directors to ensure the procedural
fairness of the transaction, including the formation of the special
committee;
- advice received by the Affiliate Stockholders, Parent and Newco, from
Tucker Anthony, a financial advisor retained by Mr. Spencer; and
- their own knowledge of Uno's business and prospects, the financial
information and projections available in Uno's filings with the Securities
and Exchange Commission or otherwise included in this proxy statement, and
the condition of the restaurant industry.
Parent, Newco, and the Affiliate Stockholders did not assign relative
weights to these factors. Rather, they viewed their position as being based on
the totality of the information presented to and considered by them, except that
particular emphasis was placed on the receipt and acceptance by the special
committee of the Adams, Harkness & Hill fairness opinion.
During the price negotiations between the Continuing Stockholders and the
special committee, Mr. Spencer indicated that he would not be interested in
selling all of his shares of Uno common stock unless he received a price per
share substantially greater than $9.75 a share. Mr. Spencer made this statement
because as the founding and majority stockholder of Uno, he believed that he
should be able to receive a control premium for the sale of all of his shares.
Notwithstanding this belief, Mr. Spencer believes that the merger consideration
of $9.75 per share is fair to the stockholders of Uno other than the Continuing
Stockholders.
Parent, Newco, and the Affiliate Stockholders believe that the merger is
procedurally fair to the stockholders of Uno other than the Continuing
Stockholders because of the measures taken by the special committee and the
board of directors to ensure the procedural fairness of the transaction,
including the formation of the special committee, the retention of legal and
financial advisors by the special committee and the extensive nature of the
negotiations between special committee and the Continuing Stockholders, Parent
and Newco.
The foregoing constitute all the material factors considered by the
Affiliate Stockholders, Parent and Newco in making their respective fairness
determination. The Affiliate Stockholders, Parent and Newco did not consider
whether the merger consideration constitutes fair value in relation to the
liquidation value of Uno and gave little consideration to the book value of Uno
because they believed that those measures of asset value were not relevant to
the market value of Uno's business. In reaching their determination, Parent,
Newco, and the Affiliate Stockholders also did not consider the purchases made
by Uno in the past two years. No Affiliate Stockholder made any purchases of Uno
common stock during the last two years other than by way of stock option
exercises. The special committee did not, and Parent, Newco and the Affiliate
Stockholders also did not, view these purchases by Uno in the past two years as
material or relevant to a determination of fairness. Uno did not receive any
firm offers to acquire Uno during the past two years. Uno did receive a
communication from a third party in April 1999, but for the reasons described
under "Special Factors--Background of the Merger", Uno did not consider this
inquiry a firm offer. See also, "Recommendation of the Board of Directors;
Fairness of the Merger--Reasons for the Special Committee's Determination."
Consequently, Parent, Newco and the Affiliate Stockholders also did not consider
any firm offers.
Other than the recommendations of the special committee and the board of
directors that the stockholders vote in favor of the adoption and approval of
the merger agreement, no other person
39
filing the Schedule 13E-3 with the Securities and Exchange Commission has made
any recommendation with respect to the merger.
Uno, Parent, Newco and the Affiliate Stockholders have not made any
provision in connection with the merger to grant unaffiliated stockholders of
Uno access to Uno's corporate records, or to obtain counsel or appraisal
services at the expense of Uno, Parent, Newco or the Affiliate Stockholders.
FORWARD LOOKING INFORMATION; CERTAIN PROJECTIONS
Uno does not, as a matter of course, make public projections as to future
sales, earnings or other results. However, in connection with the merger, Uno's
management prepared and provided to the special committee, Adams, Harkness &
Hill and Fleet National Bank N.A., the projections, which are summarized below
under the caption "Projections Prepared by Uno" for the five fiscal years ending
October 2, 2005.
The projections below were not prepared with a view to public disclosure or
compliance with published guidelines of the Securities and Exchange Commission
or the guidelines established by the American Institute of Certified Public
Accountants regarding projections. In the view of Uno's management, the
projections were prepared on a reasonable basis, reflect the best currently
available estimates and judgments, and present, to the best of the knowledge and
belief of Uno's management, the expected course of action and the expected
future performance of Uno. Neither Uno's independent accountants, nor any other
independent accountants have compiled, examined or reviewed these projections.
No independent accountants have expressed any opinion or other form of assurance
with respect to these projections or their achievability, and Uno's independent
accountants assume no responsibility for, and disclaim any association with,
these projections.
The projections included herein in one case assume that the merger has
occurred (the "Merger Projections"), and in the other case assume that the
merger does not occur (the "Going Concern Projections"). The projections were
initially prepared by management as of November 21, 2000 and November 22, 2000.
On January 31, 2001 and February 2, 2001, management revised the projections in
light of Uno's performance in the first quarter of fiscal 2001. The primary
difference between the assumptions used in the Merger Projections and those used
in the Going Concern Projections is the incurrence of a $75 million senior
credit facility that will be used to finance a portion of the merger
consideration, to refinance Uno's existing indebtedness to Fleet National Bank
and SunTrust Bank, and for working capital. Management does not intend at this
time to update the projections.
The projections below are or involve forward-looking statements and are
based upon a variety of assumptions, including Uno's ability to achieve
strategic goals, objectives and targets over the applicable periods. These
assumptions involve judgments with respect to future economic, competitive and
regulatory conditions, financial market conditions and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond Uno's control. Many important factors, in addition to
those discussed elsewhere in this proxy statement, could cause Uno's results to
differ materially from those expressed or implied by the forward-looking
statements. These factors include Uno's competitive environment, Uno's ability
to open new restaurants on a timely basis and the performance of those
restaurants, economic and other market conditions in which Uno operates and
matters affecting business generally, all of which are difficult to predict and
many of which are beyond Uno's control. Accordingly, there can be no assurance
that the projections are indicative of Uno's future performance or that actual
results will not differ materially from those in the projections set forth
below. See "Cautionary Statement Regarding Forward-Looking Statements." Uno is
not entitled to rely on the safe harbor protection of the Private Securities
Litigation Reform Act of 1995 with respect to the forward looking statements
contained in these projections.
In light of the uncertainties inherent in projections of any kind, the
inclusion of these projections in this proxy statement should not be regarded as
a representation by Uno, the board of directors of Uno, the special committee,
or any of their advisors, agents or representatives that these projections will
prove to be correct.
40
UNO RESTAURANT CORPORATION
GOING CONCERN PROJECTIONS PREPARED AS OF NOVEMBER 22, 2000
INCOME STATEMENT
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
53 WKS
--------
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST
1996 1997 1998 1999 2000 2001
-------- -------- -------- -------- -------- --------
REVENUES
Restaurant sales................. 159,581 164,389 177,343 198,560 213,715 246,854
Consumer product sales........... 8,351 9,115 9,384 10,568 11,772 13,796
Franchise income................. 4,209 4,516 4,549 5,105 5,683 6,377
-------- -------- -------- -------- -------- --------
172,141 178,020 191,276 214,233 231,170 267,027
COSTS AND EXPENSES
Cost of food and beverages....... 44,064 43,994 48,567 54,683 57,679 67,077
Labor and benefits............... 51,868 54,183 58,139 64,700 70,922 84,275
Occupancy costs.................. 26,339 27,045 27,988 29,199 30,974 36,391
Other operating costs............ 14,323 15,244 17,148 17,739 19,468 23,198
General and administrative....... 12,155 13,384 13,661 16,629 19,521 20,862
Depreciation and amortization.... 12,964 12,469 12,183 12,702 13,098 14,161
Pre-opening costs................ 1,567 823 938 594 2,137 1,440
Special charges.................. 3,937 4,000 0 0 8,588 0
-------- -------- -------- -------- -------- --------
167,217 171,142 178,624 196,246 222,387 247,404
OPERATING INCOME................... 4,924 6,878 12,652 17,987 8,783 19,623
INTEREST AND OTHER EXPENSE......... 2,481 2,827 3,661 3,139 3,019 2,938
INCOME BEFORE INCOME TAXES......... 2,443 4,051 8,991 14,848 5,764 16,684
Provision for income taxes....... 757 1,378 2,968 5,048 1,729 5,748
-------- -------- -------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT.... 1,686 2,673 6,023 9,800 4,035 10,937
Cumulative effect................ 636
--------
NET INCOME......................... 1,686 2,673 5,387 9,800 4,035 10,937
======== ======== ======== ======== ======== ========
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 14,032 13,209 12,025 11,610 11,844 11,516
Earnings Per Share................. $ 0.12 $ 0.20 $ 0.45 $ 0.84 $ 0.34 $ 0.95
======== ======== ======== ======== ======== ========
PROJECTIONS
-----------------------------------------
2002 2003 2004 2005
-------- -------- -------- --------
REVENUES
Restaurant sales................. 268,356 287,302 306,598 327,523
Consumer product sales........... 15,176 16,693 18,363 20,199
Franchise income................. 7,614 9,461 11,164 13,399
-------- -------- -------- --------
291,146 313,457 336,125 361,121
COSTS AND EXPENSES
Cost of food and beverages....... 73,048 78,346 83,841 89,746
Labor and benefits............... 91,389 98,307 105,425 113,171
Occupancy costs.................. 40,062 42,766 45,596 48,695
Other operating costs............ 25,236 27,083 29,253 31,475
General and administrative....... 21,500 22,616 24,089 25,901
Depreciation and amortization.... 15,443 16,617 17,818 19,124
Pre-opening costs................ 900 900 900 1,050
Special charges.................. 0 0 0 0
-------- -------- -------- --------
267,579 286,634 306,923 329,161
OPERATING INCOME................... 23,566 26,823 29,202 31,961
INTEREST AND OTHER EXPENSE......... 1,640 642 (569) (1,599)
INCOME BEFORE INCOME TAXES......... 21,926 26,181 29,771 33,560
Provision for income taxes....... 7,554 9,019 10,256 11,561
-------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT.... 14,373 17,162 19,515 21,999
Cumulative effect................
NET INCOME......................... 14,373 17,162 19,515 21,999
======== ======== ======== ========
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 11,516 11,516 11,516 11,516
Earnings Per Share................. $ 1.25 $ 1.49 $ 1.69 $ 1.91
======== ======== ======== ========
ASSUMPTIONS APPLICABLE TO INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH
FLOWS:
- - the completion of a $26.0 million sale and leaseback transaction, the
proceeds of which are used to repay term loans and fund, in conjunction with
internally generated cash flow, a company growth rate of six to nine new
restaurants per year;
- - a franchise growth rate of 12 to 20 new restaurants per year, based on
existing development agreements and letters of intent with current and
potential franchisees;
- - a growth rate in consumer product sales of ten percent per year, based on an
analysis of the historical growth over the past ten years; and
- - no new indebtedness.
41
UNO RESTAURANT CORPORATION
GOING CONCERN PROJECTIONS PREPARED AS OF NOVEMBER 22, 2000
BALANCE SHEET
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST --------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
Cash 1,828 1,486 2,030 752 788 724 844 3,963
Accounts receivable, net........... 2,032 2,823 1,784 2,398 3,530 3,245 3,291 3,661
Inventories........................ 2,333 2,326 2,296 2,436 2,497 2,935 3,135 3,357
Prepaid expenses................... 1,857 1,758 815 1,757 1,999 2,461 3,130 3,422
------- ------- ------- ------- ------- -------- -------- --------
Total current assets............... 8,050 8,393 6,925 7,343 8,814 9,365 10,400 14,404
Property, equipment and leaseholds,
net.............................. 120,510 125,357 125,323 128,746 141,992 125,159 129,426 131,154
Deferred income taxes.............. 3,613 6,599 7,450 10,020 14,132 16,117 16,923 17,769
Liquor licenses and other assets... 2,892 3,383 3,497 3,503 3,538 4,571 4,615 4,636
------- ------- ------- ------- ------- -------- -------- --------
135,065 143,732 143,195 149,612 168,476 155,213 161,364 167,964
======= ======= ======= ======= ======= ======== ======== ========
Accounts payable................... 6,009 6,966 6,589 7,798 9,851 10,312 10,659 11,089
Accrued expenses................... 5,033 7,563 7,949 8,668 8,459 7,740 8,430 9,028
Accrued compensation and taxes..... 2,187 2,641 2,666 3,369 2,889 3,039 3,480 3,727
Income taxes payable............... 1,581 2,076 995 2,914 558 1,680 2,799 3,608
Current portion of long-term
debt............................. 178 3,132 4,081 4,075 3,953 263 287 313
------- ------- ------- ------- ------- -------- -------- --------
Total current liabilities.......... 14,988 22,378 22,280 26,824 25,710 23,034 25,655 27,764
Long-term debt, net of current
portion.......................... 37,085 42,516 38,676 31,612 50,900 27,883 16,470 3,287
Capital lease obligations, net of
current.......................... 1,056 867 666 489 453 449 446 442
Other liabilities.................. 4,800 7,091 7,904 9,708 9,699 11,196 11,769 12,286
Shareholders equity:
Common Stock....................... 137 138 138 154 158 157 157 157
Additional paid-in capital......... 53,509 53,803 53,944 55,648 58,755 58,755 58,755 58,755
Retained earnings.................. 34,143 36,816 42,203 52,003 56,038 66,975 81,347 98,509
Treasury Stock..................... (10,653) (19,877) (22,616) (26,826) (33,237) (33,237) (33,237) (33,237)
------- ------- ------- ------- ------- -------- -------- --------
Total shareholders' equity......... 77,136 70,880 73,669 80,979 81,714 92,651 107,023 124,185
------- ------- ------- ------- ------- -------- -------- --------
135,065 143,732 143,195 149,612 168,476 155,213 161,364 167,964
======= ======= ======= ======= ======= ======== ======== ========
PROJECTIONS
--------------------
2004 2005
-------- --------
Cash 22,728 42,770
Accounts receivable, net........... 4,022 4,465
Inventories........................ 3,582 3,827
Prepaid expenses................... 3,735 4,078
-------- --------
Total current assets............... 34,067 55,139
Property, equipment and leaseholds,
net.............................. 131,919 133,821
Deferred income taxes.............. 18,657 19,590
Liquor licenses and other assets... 4,657 4,681
-------- --------
189,301 213,232
======== ========
Accounts payable................... 11,294 11,492
Accrued expenses................... 9,666 10,366
Accrued compensation and taxes..... 3,990 4,279
Income taxes payable............... 4,102 4,625
Current portion of long-term
debt............................. 341 373
-------- --------
Total current liabilities.......... 29,395 31,135
Long-term debt, net of current
portion.......................... 2,950 2,582
Capital lease obligations, net of
current.......................... 437 432
Other liabilities.................. 12,818 13,385
Shareholders equity:
Common Stock....................... 157 157
Additional paid-in capital......... 58,755 58,755
Retained earnings.................. 118,024 140,023
Treasury Stock..................... (33,237) (33,237)
-------- --------
Total shareholders' equity......... 143,700 165,699
-------- --------
189,301 213,232
======== ========
42
UNO RESTAURANT CORPORATION
GOING CONCERN PROJECTIONS PREPARED AS OF NOVEMBER 22, 2000
STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST --------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
OPERATIONS:
NET INCOME......................... 1,686 2,673 5,387 9,800 4,035 10,937 14,373 17,162
DEPRECIATION AND AMORTIZATION...... 13,064 12,573 12,292 12,823 13,233 14,161 15,443 16,617
DEFERRED TAXES..................... (2,462) (2,986) (851) (2,570) (4,112) (1,985) (806) (846)
DEFERRED RENT/OTHER................ 4,625 4,612 849 559 9,545 (525) 431 386
WORKING CAPITAL.................... 1,617 3,216 764 4,414 (2,304) 1,386 1,782 1,306
------- ------- ------- ------- ------- ------- ------- -------
OPERATIONS................... 18,530 20,088 18,441 25,026 20,397 23,974 31,223 34,625
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (22,746) (19,697) (12,141) (16,192) (35,954) (23,043) (19,468) (18,108)
INVESTMENT IN JOINT VENTURE........ 0 0 0 0 0 0 0 0
OTHER (capitalized interest)....... 0 0 0 0 0 (285) (242) (238)
------- ------- ------- ------- ------- ------- ------- -------
INVESTING.................... (22,746) (19,697) (12,141) (16,192) (35,954) (23,328) (19,710) (18,346)
FINANCING:
EQUITY............................. 76 295 127 1,556 2,523 (0) 0 (0)
TERM/SECURED NOTES................. (3,404) 0 25,640 (3,680) (3,680) (18,280) 0 0
MET LIFE MORTGAGE NOTES............ 0 4,979 (183) (200) (218) (238) (260) (283)
NEW SENIOR DEBT.................... 0 0 0 0 0 0 0 0
NOTE PAYABLE--BANK, NET............ 15,513 3,217 (28,360) (3,165) 23,205 (8,158) (11,129) (12,874)
CAPITAL LEASE OBLIGATIONS.......... 0 0 (189) (202) (177) (36) (3) (4)
SALE/LEASEBACK FUNDING............. 0 0 0 0 0 26,000 0 0
TREASURY STOCK..................... (7,753) (9,224) (2,791) (4,421) (6,060) 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
FINANCING.................... 4,739 (733) (5,756) (10,112) 15,593 (711) (11,392) (13,161)
CASH CHANGE........................ 523 (342) 544 (1,278) 36 (65) 121 3,119
BEGINNING CASH..................... 1,305 1,828 1,486 2,030 752 788 724 845
------- ------- ------- ------- ------- ------- ------- -------
ENDING CASH........................ 1,828 1,486 2,030 752 788 724 845 3,963
======= ======= ======= ======= ======= ======= ======= =======
PROJECTIONS
--------------------
2004 2005
-------- --------
OPERATIONS:
NET INCOME......................... 19,515 21,999
DEPRECIATION AND AMORTIZATION...... 17,818 19,124
DEFERRED TAXES..................... (888) (933)
DEFERRED RENT/OTHER................ 393 409
WORKING CAPITAL.................... 823 810
------- -------
OPERATIONS................... 37,661 41,409
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (18,342) (20,753)
INVESTMENT IN JOINT VENTURE........ 0 0
OTHER (capitalized interest)....... (241) (272)
------- -------
INVESTING.................... (18,582) (21,026)
FINANCING:
EQUITY............................. (0) 0
TERM/SECURED NOTES................. 0 0
MET LIFE MORTGAGE NOTES............ (309) (337)
NEW SENIOR DEBT.................... 0 0
NOTE PAYABLE--BANK, NET............ (0) 0
CAPITAL LEASE OBLIGATIONS.......... (4) (4)
SALE/LEASEBACK FUNDING............. 0 0
TREASURY STOCK..................... 0 0
------- -------
FINANCING.................... (314) (342)
CASH CHANGE........................ 18,765 20,042
BEGINNING CASH..................... 3,963 22,728
------- -------
ENDING CASH........................ 22,728 42,770
======= =======
43
UNO RESTAURANT CORPORATION
GOING CONCERN PROJECTIONS PREPARED AS OF JANUARY 31, 2001
INCOME STATEMENT
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
ACTUAL
1996
--------
REVENUES
Restaurant sales................. 159,581
Consumer product sales........... 8,351
Franchise income................. 4,209
-------
172,141
COSTS AND EXPENSES
Cost of food and beverages....... 44,064
Labor and benefits............... 51,868
Occupancy costs.................. 26,339
Other operating costs............ 14,323
General and administrative....... 12,155
Depreciation and amortization.... 12,964
Pre-opening costs................ 1,567
Special charges.................. 3,937
-------
167,217
OPERATING INCOME................... 4,924
INTEREST AND OTHER EXPENSE......... 2,481
INCOME BEFORE INCOME TAXES......... 2,443
Provision for income taxes....... 757
-------
INCOME BEFORE CUMULATIVE EFFECT.... 1,686
Cumulative effect
NET INCOME......................... 1,686
=======
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 14,032
Earnings Per Share................. $ 0.12
=======
53 WKS
------
ACTUAL ACTUAL ACTUAL ACTUAL FORECAST
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
REVENUES
Restaurant sales................. 164,389 177,343 198,560 213,715 241,099
Consumer product sales........... 9,115 9,384 10,568 11,772 13,051
Franchise income................. 4,516 4,549 5,105 5,683 5,954
------- ------- ------- ------- -------
178,020 191,276 214,233 231,170 260,104
COSTS AND EXPENSES
Cost of food and beverages....... 43,994 48,567 54,683 57,679 65,375
Labor and benefits............... 54,183 58,139 64,700 70,922 82,688
Occupancy costs.................. 27,045 27,988 29,199 30,974 36,424
Other operating costs............ 15,244 17,148 17,739 19,468 22,984
General and administrative....... 13,384 13,661 16,629 19,521 20,645
Depreciation and amortization.... 12,469 12,183 12,702 13,098 13,645
Pre-opening costs................ 823 938 594 2,137 1,122
Special charges.................. 4,000 0 0 8,588 0
------- ------- ------- ------- -------
171,142 178,624 196,246 222,387 242,884
OPERATING INCOME................... 6,878 12,652 17,987 8,783 17,220
INTEREST AND OTHER EXPENSE......... 2,827 3,661 3,139 3,019 2,708
INCOME BEFORE INCOME TAXES......... 4,051 8,991 14,848 5,764 14,512
Provision for income taxes....... 1,378 2,968 5,048 1,729 4,934
------- ------- ------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT.... 2,673 6,023 9,800 4,035 9,578
Cumulative effect
636
-------
NET INCOME......................... 2,673 5,387 9,800 4,035 9,578
======= ======= ======= ======= =======
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 13,209 12,025 11,610 11,844 11,285
Earnings Per Share................. $ 0.20 $ 0.45 $ 0.84 $ 0.34 $ 0.85
======= ======= ======= ======= =======
PROJECTIONS
-----------------------------------------
2002 2003 2004 2005
-------- -------- -------- --------
REVENUES
Restaurant sales................. 262,633 281,464 300,642 321,452
Consumer product sales........... 14,356 15,792 17,371 19,108
Franchise income................. 7,210 8,897 10,187 11,751
------- ------- ------- -------
284,199 306,153 328,200 352,311
COSTS AND EXPENSES
Cost of food and beverages....... 71,334 76,576 82,011 87,856
Labor and benefits............... 89,844 96,737 103,829 111,551
Occupancy costs.................. 41,382 44,227 47,200 50,453
Other operating costs............ 25,042 26,896 29,068 31,294
General and administrative....... 21,500 22,598 24,031 25,779
Depreciation and amortization.... 14,790 15,951 17,139 18,431
Pre-opening costs................ 900 900 900 1,050
Special charges.................. 0 0 0 0
------- ------- ------- -------
264,791 283,885 304,178 326,414
OPERATING INCOME................... 19,408 22,268 24,022 25,897
INTEREST AND OTHER EXPENSE......... 718 272 (750) (1,576)
INCOME BEFORE INCOME TAXES......... 18,690 21,996 24,772 27,474
Provision for income taxes....... 6,355 7,479 8,422 9,341
------- ------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT.... 12,335 14,518 16,350 18,133
Cumulative effect
NET INCOME......................... 12,335 14,518 16,350 18,133
======= ======= ======= =======
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 11,285 11,285 11,285 11,285
Earnings Per Share................. $ 1.09 $ 1.29 $ 1.45 $ 1.61
======= ======= ======= =======
ASSUMPTIONS APPLICABLE TO INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH
FLOWS:
- - a company growth rate of six to eight new restaurants per year;
- - a franchise growth rate of ten to 14 new restaurants per year, based on
existing development agreements and letters of intent with current and
potential franchisees;
- - a growth rate in consumer product sales of ten percent per year based on an
analysis of the historical growth over the past ten years;
- - the completion of a $35.0 million in sale and leaseback transactions, the
proceeds of which are used to repay term loans; and
- - no new indebtedness.
44
UNO RESTAURANT CORPORATION
GOING CONCERN PROJECTIONS PREPARED AS OF JANUARY 31, 2001
BALANCE SHEET
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST -------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
Cash............................... 1,828 1,486 2,030 752 788 724 824 9,463
Accounts receivable, net........... 2,032 2,823 1,784 2,398 3,530 3,045 3,166 3,522
Inventories........................ 2,333 2,326 2,296 2,436 2,497 2,935 3,068 3,288
Prepaid expenses................... 1,857 1,758 815 1,757 1,999 2,111 3,095 3,388
------- ------- ------- ------- ------- -------- -------- --------
Total current assets............... 8,050 8,393 6,925 7,343 8,814 8,815 10,153 19,661
Property, equipment and leaseholds,
net.............................. 120,510 125,357 125,323 128,746 141,992 114,471 119,334 121,677
Deferred income taxes.............. 3,613 6,599 7,450 10,020 14,132 14,565 15,293 16,058
Liquor licenses and other assets... 2,892 3,383 3,497 3,503 3,538 4,571 4,616 4,638
135,065 143,732 143,195 149,612 168,476 142,423 149,396 162,035
======= ======= ======= ======= ======= ======== ======== ========
Accounts payable................... 6,009 6,966 6,589 7,798 9,851 10,312 10,567 11,003
Accrued expenses................... 5,033 7,563 7,949 8,668 8,459 8,140 8,359 8,958
Accrued compensation and taxes..... 2,187 2,641 2,666 3,369 2,889 3,039 3,451 3,698
Income taxes payable............... 1,581 2,076 995 2,914 558 1,680 2,260 2,991
Current portion of long-term
debt............................. 178 3,132 4,081 4,075 3,953 263 287 313
------- ------- ------- ------- ------- -------- -------- --------
Total current liabilities.......... 14,988 22,378 22,280 26,824 25,710 23,433 24,923 26,964
Long-term debt, net of current
portion.......................... 37,085 42,516 38,676 31,612 50,900 15,211 7,755 3,287
Capital lease obligations, net of
current.......................... 1,056 867 666 489 453 449 446 442
Other liabilities.................. 4,800 7,091 7,904 9,708 9,699 11,846 12,455 13,008
Shareholders' equity:
Common Stock....................... 137 138 138 154 158 157 157 157
Additional paid-in capital......... 53,509 53,803 53,944 55,648 58,755 58,945 58,945 58,945
Retained earnings.................. 34,143 36,816 42,203 52,003 56,038 65,616 77,952 92,469
Treasury Stock..................... (10,653) (19,877) (22,616) (26,826) (33,237) (33,237) (33,237) (33,237)
------- ------- ------- ------- ------- -------- -------- --------
Total shareholders' equity......... 77,136 70,880 73,669 80,979 81,714 91,482 103,818 118,335
------- ------- ------- ------- ------- -------- -------- --------
135,065 143,732 143,195 149,612 168,476 142,423 149,396 162,035
======= ======= ======= ======= ======= ======== ======== ========
PROJECTIONS
-------------------
2004 2005
-------- --------
Cash............................... 24,507 40,108
Accounts receivable, net........... 3,821 4,176
Inventories........................ 3,512 3,756
Prepaid expenses................... 3,701 4,044
-------- --------
Total current assets............... 35,542 52,085
Property, equipment and leaseholds,
net.............................. 123,070 125,614
Deferred income taxes.............. 16,861 17,704
Liquor licenses and other assets... 4,659 4,683
180,132 200,086
======== ========
Accounts payable................... 11,214 11,416
Accrued expenses................... 9,597 10,297
Accrued compensation and taxes..... 3,962 4,251
Income taxes payable............... 3,369 3,736
Current portion of long-term
debt............................. 341 373
-------- --------
Total current liabilities.......... 28,482 30,074
Long-term debt, net of current
portion.......................... 2,950 2,582
Capital lease obligations, net of
current.......................... 437 432
Other liabilities.................. 13,577 14,182
Shareholders' equity:
Common Stock....................... 157 157
Additional paid-in capital......... 58,945 58,945
Retained earnings.................. 108,819 126,951
Treasury Stock..................... (33,237) (33,237)
-------- --------
Total shareholders' equity......... 134,685 152,817
-------- --------
180,132 200,086
======== ========
45
UNO RESTAURANT CORPORATION
GOING CONCERN PROJECTIONS PREPARED AS OF JANUARY 31, 2001
STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
53 WKS
------ PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST -------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
OPERATIONS:
NET INCOME......................... 1,686 2,673 5,387 9,800 4,035 9,578 12,335 14,518
DEPRECIATION AND AMORTIZATION...... 13,064 12,573 12,292 12,823 13,233 13,645 14,790 15,951
DEFERRED TAXES..................... (2,462) (2,986) (851) (2,570) (4,112) (197) (566) (603)
DEFERRED RENT/OTHER................ 4,625 4,612 849 559 9,545 (110) 303 259
WORKING CAPITAL.................... 1,617 3,216 764 4,414 (2,304) 2,336 327 1,254
------- ------- ------- ------- ------- ------- ------- -------
OPERATIONS....................... 18,530 20,088 18,441 25,026 20,397 25,252 27,189 31,380
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (22,746) (19,697) (12,141) (16,192) (35,954) (20,864) (19,418) (18,058)
INVESTMENT IN JOINT VENTURE........ 0 0 0 0 0 0 0 0
OTHER (capitalized interest)....... 0 0 0 0 0 (260) (235) (237)
------- ------- ------- ------- ------- ------- ------- -------
INVESTING........................ (22,746) (19,697) (12,141) (16,192) (35,954) (21,124) (19,652) (18,295)
FINANCING:
EQUITY............................. 76 295 127 1,556 2,523 190 0 (0)
TERM/SECURED NOTES................. (3,404) 0 25,640 (3,680) (3,680) (18,280) 0 0
MET LIFE MORTGAGE NOTES............ 0 4,979 (183) (200) (218) (238) (260) (283)
NEW SENIOR DEBT.................... 0 0 0 0 0 0 0 0
NOTE PAYABLE--BANK, NET............ 15,513 3,217 (28,360) (3,165) 23,205 (20,829) (7,172) (4,159)
CAPITAL LEASE OBLIGATIONS.......... 0 (189) (202) (177) (36) (3) (4)
SALE/LEASEBACK FUNDING............. 0 0 0 0 0 35,000 0 0
TREASURY STOCK..................... (7,753) (9,224) (2,791) (4,421) (6,060) 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
FINANCING........................ 4,739 (733) (5,756) (10,112) 15,593 (4,193) (7,436) (4,446)
CASH CHANGE........................ 523 (342) 544 (1,278) 36 (65) 101 8,639
BEGINNING CASH..................... 1,305 1,828 1,486 2,030 752 788 724 824
------- ------- ------- ------- ------- ------- ------- -------
ENDING CASH........................ 1,828 1,486 2,030 752 788 724 824 9,463
======= ======= ======= ======= ======= ======= ======= =======
PROJECTIONS
-------------------
2004 2005
-------- --------
OPERATIONS:
NET INCOME......................... 16,350 18,133
DEPRECIATION AND AMORTIZATION...... 17,139 18,431
DEFERRED TAXES..................... (641) (681)
DEFERRED RENT/OTHER................ 268 287
WORKING CAPITAL.................... 773 749
------- -------
OPERATIONS....................... 33,889 36,918
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (18,292) (20,703)
INVESTMENT IN JOINT VENTURE........ 0 0
OTHER (capitalized interest)....... (240) (272)
------- -------
INVESTING........................ (18,532) (20,975)
FINANCING:
EQUITY............................. 0 (0)
TERM/SECURED NOTES................. 0 0
MET LIFE MORTGAGE NOTES............ (309) (337)
NEW SENIOR DEBT.................... 0 0
NOTE PAYABLE--BANK, NET............ (0) (0)
CAPITAL LEASE OBLIGATIONS.......... (4) (4)
SALE/LEASEBACK FUNDING............. 0 0
TREASURY STOCK..................... 0 0
------- -------
FINANCING........................ (313) (342)
CASH CHANGE........................ 15,044 15,601
BEGINNING CASH..................... 9,463 24,508
------- -------
ENDING CASH........................ 24,508 40,109
======= =======
46
UNO RESTAURANT CORPORATION
MERGER PROJECTIONS PREPARED AS OF NOVEMBER 21, 2000
INCOME STATEMENT
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST -------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
REVENUES
Restaurant Sales................. 159,581 164,389 177,343 198,560 213,715 246,854 266,117 280,486
Consumer product sales........... 8,351 9,115 9,384 10,568 11,772 13,796 15,176 16,693
Franchise income................. 4,209 4,516 4,549 5,105 5,683 6,377 7,614 9,461
------- ------- ------- ------- ------- ------- ------- -------
172,141 178,020 191,276 214,233 231,170 267,027 288,907 306,641
COSTS AND EXPENSES
Cost of food and beverages....... 44,064 43,994 48,567 54,683 57,679 67,077 72,479 76,612
Labor and benefits............... 51,868 54,183 58,139 64,700 70,922 84,275 90,660 96,076
Occupancy costs.................. 26,339 27,045 27,988 29,199 30,974 37,651 41,516 43,643
Other operating costs............ 14,323 15,244 17,148 17,739 19,468 23,198 25,049 26,512
General and administrative....... 12,155 13,384 13,661 16,629 19,521 20,862 21,500 22,698
Depreciation and amortization.... 12,964 12,469 12,183 12,702 13,098 13,696 14,850 15,761
Pre-opening costs................ 1,567 823 938 594 2,137 1,440 600 600
Special charges.................. 3,937 4,000 0 0 8,588 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
167,217 171,142 178,624 196,246 222,387 248,199 266,654 281,903
OPERATING INCOME................... 4,924 6,878 12,652 17,987 8,783 18,828 22,253 24,738
INTEREST AND OTHER EXPENSE......... 2,481 2,827 3,661 3,139 3,019 9,029 5,926 4,780
INCOME BEFORE INCOME TAXES......... 2,443 4,051 8,991 14,848 5,764 9,799 16,327 19,958
Provision for income taxes......... 757 1,378 2,968 5,048 1,729 3,375 5,625 6,876
------- ------- ------- ------- ------- ------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT.... 1,686 2,673 6,023 9,800 4,035 6,423 10,702 13,083
Cumulative effect.................. 636
-------
NET INCOME......................... 1,686 2,673 5,387 9,800 4,035 6,423 10,702 13,083
------- ------- ------- ------- ------- ------- ------- -------
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 14,032 13,209 12,025 11,610 11,844 7,159 7,159 7,159
Earnings Per Share................. $ 0.12 $ 0.20 $ 0.45 $ 0.84 $ 0.34 $ 0.90 $ 1.49 $ 1.83
------- ------- ------- ------- ------- ------- ------- -------
PROJECTIONS
------------------------------
2004 2005 2006
-------- -------- --------
REVENUES
Restaurant Sales................. 295,121 311,265 332,226
Consumer product sales........... 18,363 20,199 22,219
Franchise income................. 11,164 13,399 15,667
------- ------- -------
324,648 344,863 370,112
COSTS AND EXPENSES
Cost of food and beverages....... 80,919 85,607 91,678
Labor and benefits............... 101,655 107,810 115,606
Occupancy costs.................. 45,888 48,394 51,709
Other operating costs............ 28,283 30,093 32,322
General and administrative....... 23,778 25,228 27,273
Depreciation and amortization.... 16,696 17,727 19,045
Pre-opening costs................ 600 750 1,200
Special charges.................. 0 0 0
------- ------- -------
297,819 315,609 338,832
OPERATING INCOME................... 26,829 29,254 31,279
INTEREST AND OTHER EXPENSE......... 3,149 1,516 (145)
INCOME BEFORE INCOME TAXES......... 23,680 27,738 31,424
Provision for income taxes......... 8,158 9,556 10,825
------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT.... 15,522 18,182 20,599
Cumulative effect..................
NET INCOME......................... 15,522 18,182 20,599
------- ------- -------
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 7,159 7,159 7,159
Earnings Per Share................. $ 2.17 $ 2.54 $ 2.88
------- ------- -------
ASSUMPTIONS APPLICABLE TO INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH
FLOWS:
- - a company growth rate of six to nine new restaurants per year;
- - a franchise growth rate of 12 to 20 new restaurants per year, based on
existing development agreements and letters of intent with current and
potential franchisees;
- - a growth rate in consumer product sales of ten percent per year based on an
analysis of the historical growth over the past ten years;
- - the incurrence of indebtedness of $60.0 million in term loans and a
$20.0 million revolving line of credit, replacing Uno's current credit
facility and the completion of a $47.9 million equity buyback transaction;
and
- - the completion of $41.0 million in sale and leaseback transactions.
47
UNO RESTAURANT CORPORATION
MERGER PROJECTIONS PREPARED AS OF NOVEMBER 21, 2000
BALANCE SHEET
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST -------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
Cash............................... 1,828 1,486 2,030 752 788 724 838 5,179
Accounts receivable, net........... 2,032 2,823 1,784 2,398 3,530 2,795 3,291 3,661
Inventories........................ 2,333 2,326 2,296 2,436 2,497 2,935 3,109 3,277
Prepaid expenses................... 1,857 1,758 815 1,757 1,999 2,111 3,124 3,359
------- ------- ------- ------- ------- -------- -------- --------
Total current assets............... 8,050 8,393 6,925 7,343 8,814 8,565 10,362 15,477
Property, equipment and leaseholds,
net.............................. 120,510 125,357 125,323 128,746 141,992 110,657 108,402 105,132
Deferred income taxes.............. 3,613 6,599 7,450 10,020 14,132 16,117 16,923 17,769
Liquor licenses and other assets... 2,892 3,383 3,497 3,503 3,538 4,571 4,598 4,611
------- ------- ------- ------- ------- -------- -------- --------
135,065 143,732 143,195 149,612 168,476 139,911 140,284 142,990
======= ======= ======= ======= ======= ======== ======== ========
Accounts payable................... 6,009 6,966 6,589 7,798 9,851 10,312 10,844 10,930
Accrued expenses................... 5,033 7,563 7,949 8,668 8,459 9,240 8,419 8,898
Accrued compensation and taxes..... 2,187 2,641 2,666 3,369 2,889 3,339 3,475 3,673
Income taxes payable............... 1,581 2,076 995 2,914 558 2,180 2,531 2,750
Current portion of long-term
debt............................. 178 3,132 4,081 4,075 3,953 9,863 11,137 12,163
------- ------- ------- ------- ------- -------- -------- --------
Total current liabilities.......... 14,988 22,378 22,280 26,824 25,710 34,934 36,407 38,415
Long-term debt, net of current
portion.......................... 37,085 42,516 38,676 31,612 50,900 54,095 41,781 28,912
Capital lease obligations, net of
current.......................... 1,056 867 666 489 453 449 446 442
Other liabilities.................. 4,800 7,091 7,904 9,708 9,699 11,196 11,711 12,200
Shareholders' equity:
Common Stock....................... 137 138 138 154 158 157 157 157
Additional paid-in capital......... 53,509 53,803 53,944 55,648 58,755 58,755 58,755 58,755
Retained earnings.................. 34,143 36,816 42,203 52,003 56,038 62,461 73,163 86,246
Treasury Stock..................... (10,653) (19,877) (22,616) (26,826) (33,237) (82,137) (82,137) (82,137)
------- ------- ------- ------- ------- -------- -------- --------
Total shareholders' equity......... 77,136 70,880 73,669 80,979 81,714 39,237 49,939 63,022
------- ------- ------- ------- ------- -------- -------- --------
135,065 143,732 143,195 149,612 168,476 139,911 140,284 142,990
======= ======= ======= ======= ======= ======== ======== ========
PROJECTIONS
------------------------------
2004 2005 2006
-------- -------- --------
Cash............................... 11,877 18,030 30,192
Accounts receivable, net........... 4,022 4,465 4,929
Inventories........................ 3,448 3,637 3,881
Prepaid expenses................... 3,604 3,879 4,238
-------- -------- --------
Total current assets............... 22,952 30,010 43,240
Property, equipment and leaseholds,
net.............................. 101,897 100,830 105,775
Deferred income taxes.............. 18,657 19,590 20,570
Liquor licenses and other assets... 4,623 4,640 4,664
-------- -------- --------
148,130 155,070 174,250
======== ======== ========
Accounts payable................... 10,983 11,042 11,214
Accrued expenses................... 9,399 9,960 10,692
Accrued compensation and taxes..... 3,880 4,111 4,414
Income taxes payable............... 3,263 3,822 4,330
Current portion of long-term
debt............................. 13,191 3,723 9,832
-------- -------- --------
Total current liabilities.......... 40,717 32,658 40,482
Long-term debt, net of current
portion.......................... 15,725 12,007 2,180
Capital lease obligations, net of
current.......................... 437 432 427
Other liabilities.................. 12,706 13,248 13,836
Shareholders' equity:
Common Stock....................... 157 157 157
Additional paid-in capital......... 58,755 58,755 58,755
Retained earnings.................. 101,769 119,951 140,549
Treasury Stock..................... (82,137) (82,137) (82,137)
-------- -------- --------
Total shareholders' equity......... 78,545 96,727 117,325
-------- -------- --------
148,130 155,070 174,250
======== ======== ========
48
UNO RESTAURANT CORPORATION
MERGER PROJECTIONS PREPARED AS OF NOVEMBER 21, 2000
STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST -------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
OPERATIONS:
NET INCOME......................... 1,686 2,673 5,387 9,800 4,035 6,423 10,703 13,083
DEPRECIATION AND AMORTIZATION...... 13,064 12,573 12,292 12,823 13,233 13,696 14,850 15,761
DEFERRED TAXES..................... (2,462) (2,986) (851) (2,570) (4,112) (1,749) (644) (684)
DEFERRED RENT/OTHER................ 4,625 4,612 849 559 9,545 (760) 227 205
WORKING CAPITAL.................... 1,617 3,216 764 4,414 (2,304) 4,486 (1,384) 316
------- ------- ------- ------- ------- ------- -------- --------
OPERATIONS....................... 18,530 20,088 18,441 25,026 20,397 22,095 23,752 28,681
------- ------- ------- ------- ------- ------- -------- --------
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (22,746) (11,697) (12,141) (16,192) (35,954) (23,043) (12,428) (12,330)
INVESTMENT IN JOINT VENTURE........ 0 0 0 0 0 0 0 0
OTHER (capitalized interest)....... 0 0 0 0 0 (318) (167) (162)
------- ------- ------- ------- ------- ------- -------- --------
INVESTING........................ (22,746) (11,697) (12,141) (16,192) (35,954) (23,360) (12,595) (12,492)
------- ------- ------- ------- ------- ------- -------- --------
FINANCING:
EQUITY............................. 76 295 127 1,556 2,523 0 (0) 0
TERM/SECURED NOTES................. (3,404) 0 25,640 (3,680) (3,680) (18,280) 0 0
MET LIFE MORTGAGE NOTES............ 0 4,979 (183) (200) (218) (238) (260) (283)
NEW SENIOR DEBT.................... 0 0 0 0 0 57,925 (9,600) (10,850)
NOTE PAYABLE--BANK, NET............ 15,513 3,217 (28,360) (3,165) 23,205 (30,271) (1,180) (710)
CAPITAL LEASE OBLIGATIONS.......... -- (189) (202) (177) (36) (3) (4)
SALE/LEASEBACK FUNDING............. 0 0 0 0 0 41,000 0 0
TREASURY STOCK..................... (7,753) (9,224) (2,791) (4,421) (6,060) (48,900) 0 0
------- ------- ------- ------- ------- ------- -------- --------
FINANCING........................ 4,739 (733) (5,756) (10,112) 15,593 1,200 (11,043) (11,847)
------- ------- ------- ------- ------- ------- -------- --------
CASH CHANGE........................ 523 (342) 544 (1,278) 36 (65) 114 4,342
BEGINNING CASH..................... 1,305 1,828 1,486 2,030 752 788 724 838
------- ------- ------- ------- ------- ------- -------- --------
ENDING CASH........................ 1,828 1,486 2,030 752 788 724 838 5,180
======= ======= ======= ======= ======= ======= ======== ========
PROJECTIONS
------------------------------
2004 2005 2006
-------- -------- --------
OPERATIONS:
NET INCOME......................... 15,522 18,182 20,598
DEPRECIATION AND AMORTIZATION...... 16,696 17,727 19,045
DEFERRED TAXES..................... (726) (771) (818)
DEFERRED RENT/OTHER................ 213 231 258
WORKING CAPITAL.................... 616 635 792
-------- -------- -------
OPERATIONS....................... 32,321 36,004 39,876
-------- -------- -------
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (13,286) (16,444) (23,680)
INVESTMENT IN JOINT VENTURE........ 0 0 0
OTHER (capitalized interest)....... (174) (216) (311)
-------- -------- -------
INVESTING........................ (13,460) (16,660) (23,990)
-------- -------- -------
FINANCING:
EQUITY............................. (0) (0) (0)
TERM/SECURED NOTES................. 0 0 0
MET LIFE MORTGAGE NOTES............ (309) (337) (368)
NEW SENIOR DEBT.................... (11,850) (12,850) (3,350)
NOTE PAYABLE--BANK, NET............ 0 (0) (0)
CAPITAL LEASE OBLIGATIONS.......... (4) (4) (5)
SALE/LEASEBACK FUNDING............. 0 0 0
TREASURY STOCK..................... 0 0 0
-------- -------- -------
FINANCING........................ (12,163) (13,192) (3,723)
-------- -------- -------
CASH CHANGE........................ 6,697 6,152 12,163
BEGINNING CASH..................... 5,180 11,877 18,030
-------- -------- -------
ENDING CASH........................ 11,877 18,030 30,192
======== ======== =======
49
UNO RESTAURANT CORPORATION
MERGER PROJECTIONS PREPARED AS OF FEBRUARY 2, 2001
INCOME STATEMENT
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
53 WKS PROJECTIONS
-------- -------------------
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
REVENUES
Restaurant sales................. 159,581 164,389 177,343 198,560 213,715 241,099 263,757 279,118
Consumer product sales........... 8,351 9,115 9,384 10,568 11,772 13,051 14,356 15,792
Franchise income................. 4,209 4,516 4,549 5,105 5,683 5,954 7,210 8,897
------- ------- ------- ------- ------- ------- ------- -------
172,141 178,020 191,276 214,233 231,170 260,104 285,323 303,807
COSTS AND EXPENSES
Cost of food and beverages....... 44,064 43,994 48,567 54,683 57,679 65,375 71,620 75,979
Labor and benefits............... 51,868 54,183 58,139 64,700 70,922 82,688 90,212 95,965
Occupancy costs.................. 26,339 27,045 27,988 29,199 30,974 36,424 41,550 43,852
Other operating costs............ 14,323 15,244 17,148 17,739 19,468 22,984 25,138 26,696
General and administrative....... 12,155 13,384 13,661 16,629 19,521 20,645 21,500 22,424
Depreciation and amortization.... 12,964 12,469 12,183 12,702 13,098 13,645 14,854 15,817
Pre-opening costs................ 1,567 823 938 594 2,137 1,122 1,050 300
Special charges.................. 3,937 4,000 0 0 8,588 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
167,217 171,142 178,624 196,246 222,387 242,884 265,923 281,034
OPERATING INCOME................... 4,924 6,878 12,652 17,987 8,783 17,220 19,400 22,773
INTEREST AND OTHER EXPENSE......... 2,481 2,827 3,661 3,139 3,019 8,458 6,558 5,726
INCOME BEFORE INCOME TAXES......... 2,443 4,051 8,991 14,848 5,764 8,762 12,842 17,047
Provision for income taxes......... 757 1,378 2,968 5,048 1,729 2,979 4,366 5,796
------- ------- ------- ------- ------- ------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT.... 1,686 2,673 6,023 9,800 4,035 5,783 8,476 11,251
Cumulative effect.................. 636
-------
NET INCOME......................... 1,686 2,673 5,387 9,800 4,035 5,783 8,476 11,251
======= ======= ======= ======= ======= ======= ======= =======
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 14,032 13,209 12,025 11,610 11,844 7,159 7,159 7,159
Earnings Per Share................. $ 0.12 $ 0.20 $ 0.45 $ 0.84 $ 0.34 $ 0.81 $ 1.18 $ 1.57
======= ======= ======= ======= ======= ======= ======= =======
PROJECTIONS
------------------------------
2004 2005 2006
-------- -------- --------
REVENUES
Restaurant sales................. 291,447 307,506 328,381
Consumer product sales........... 17,371 19,108 21,019
Franchise income................. 10,187 11,751 13,254
------- ------- -------
319,005 338,365 362,654
COSTS AND EXPENSES
Cost of food and beverages....... 79,671 84,306 90,320
Labor and benefits............... 100,794 106,930 114,714
Occupancy costs.................. 45,759 48,276 51,607
Other operating costs............ 28,276 30,087 32,325
General and administrative....... 23,412 24,816 26,637
Depreciation and amortization.... 16,613 17,632 18,935
Pre-opening costs................ 600 750 1,200
Special charges.................. 0 0 0
------- ------- -------
295,125 312,797 335,738
OPERATING INCOME................... 23,880 25,569 26,916
INTEREST AND OTHER EXPENSE......... 4,103 2,636 1,231
INCOME BEFORE INCOME TAXES......... 19,777 22,932 25,685
Provision for income taxes......... 6,724 7,797 8,733
------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT.... 13,053 15,135 16,952
Cumulative effect..................
NET INCOME......................... 13,053 15,135 16,952
======= ======= =======
WEIGHTED-AVERAGE SHARES
OUTSTANDING...................... 7,159 7,159 7,159
Earnings Per Share................. $ 1.82 $ 2.11 $ 2.37
======= ======= =======
ASSUMPTIONS APPLICABLE TO INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH
FLOWS:
- - a company growth rate of four to six new restaurants per year;
- - a franchise growth rate of ten to 14 new restaurants per year based on
existing development agreements and letters of intent with current and
potential franchisees;
- - a growth rate in consumer product sales of ten percent per year based on an
analysis of the historical growth over the past ten years; and
- - the completion of a $35.0 million sale and leaseback transaction, the
incurrence of $75.0 million in new senior indebtedness and the completion of
a $47.9 million equity buyback transaction.
50
UNO RESTAURANT CORPORATION
MERGER PROJECTIONS PREPARED AS OF FEBRUARY 2, 2001
BALANCE SHEET
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST -------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
Cash............................... 1,828 1,486 2,030 752 788 724 827 790
Accounts receivable, net........... 2,032 2,823 1,784 2,398 3,530 3,045 3,166 3,522
Inventories........................ 2,333 2,326 2,296 2,436 2,497 2,935 3,082 3,261
Prepaid expenses................... 1,857 1,758 815 1,757 1,999 2,111 3,112 3,344
------- ------- ------- ------- ------- -------- -------- --------
Total current assets............... 8,050 8,393 6,925 7,343 8,814 8,815 10,187 10,916
Property, equipment and leaseholds,
net.............................. 120,510 125,357 125,323 128,746 141,992 114,472 119,677 115,027
Deferred income taxes.............. 3,613 6,599 7,450 10,020 14,132 14,565 15,293 16,058
Liquor licenses and other assets... 2,892 3,383 3,497 3,503 3,538 4,571 4,625 4,634
------- ------- ------- ------- ------- -------- -------- --------
135,065 143,732 143,195 149,612 168,476 142,424 149,782 146,636
======= ======= ======= ======= ======= ======== ======== ========
Accounts payable................... 6,009 6,966 6,589 7,798 9,851 10,312 10,613 10,892
Accrued expenses................... 5,033 7,563 7,949 8,668 8,459 8,140 8,394 8,867
Accrued compensation and taxes..... 2,187 2,641 2,666 3,369 2,889 3,039 3,465 3,661
Income taxes payable............... 1,581 2,076 995 2,914 558 1,680 1,365 2,318
Current portion of long-term
debt............................. 178 3,132 4,081 4,075 3,953 6,812 8,452 9,478
------- ------- ------- ------- ------- -------- -------- --------
Total current liabilities.......... 14,988 22,378 22,280 26,824 25,710 29,983 32,289 35,216
Long-term debt, net of current
portion.......................... 37,085 42,516 38,676 31,612 50,900 60,358 56,299 38,471
Capital lease obligations, net of
current.......................... 1,056 867 666 489 453 449 446 442
Other liabilities.................. 4,800 7,091 7,904 9,708 9,699 11,846 12,485 12,994
Shareholders' equity:
Common Stock....................... 137 138 138 154 158 157 157 157
Additional paid-in capital......... 53,509 53,803 53,944 55,648 58,755 58,945 58,945 58,945
Retained earnings.................. 34,143 36,816 42,203 52,003 56,038 61,821 70,297 81,548
Treasury Stock..................... (10,653) (19,877) (22,616) (26,826) (33,237) (81,137) (81,137) (81,137)
------- ------- ------- ------- ------- -------- -------- --------
Total shareholders' equity......... 77,136 70,880 73,669 80,979 81,714 39,787 48,263 59,514
------- ------- ------- ------- ------- -------- -------- --------
135,065 143,732 143,195 149,612 168,476 142,424 149,782 146,636
======= ======= ======= ======= ======= ======== ======== ========
PROJECTIONS
------------------------------
2004 2005 2006
-------- -------- --------
Cash............................... 765 6,064 12,016
Accounts receivable, net........... 3,821 4,176 4,539
Inventories........................ 3,405 3,593 3,837
Prepaid expenses................... 3,562 3,834 4,190
-------- -------- --------
Total current assets............... 11,553 17,667 24,582
Property, equipment and leaseholds,
net.............................. 113,218 112,727 118,263
Deferred income taxes.............. 16,861 17,704 18,589
Liquor licenses and other assets... 4,646 4,663 4,687
-------- -------- --------
146,279 152,762 166,121
======== ======== ========
Accounts payable................... 10,881 10,941 11,109
Accrued expenses................... 9,312 9,869 10,592
Accrued compensation and taxes..... 3,844 4,074 4,373
Income taxes payable............... 2,690 3,119 3,493
Current portion of long-term
debt............................. 10,506 5,788 14,548
-------- -------- --------
Total current liabilities.......... 37,233 33,790 44,115
Long-term debt, net of current
portion.......................... 22,506 16,723 2,180
Capital lease obligations, net of
current.......................... 437 432 427
Other liabilities.................. 13,536 14,116 14,745
Shareholders' equity:
Common Stock....................... 157 157 157
Additional paid-in capital......... 58,945 58,945 58,945
Retained earnings.................. 94,601 109,736 126,688
Treasury Stock..................... (81,137) (81,137) (81,137)
-------- -------- --------
Total shareholders' equity......... 72,566 87,702 104,654
-------- -------- --------
146,279 152,762 166,121
======== ======== ========
51
UNO RESTAURANT CORPORATION
MERGER PROJECTIONS PREPARED AS OF FEBRUARY 2, 2001
STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
53 WKS
-------- PROJECTIONS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL FORECAST -------------------
1996 1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- -------- --------
OPERATIONS:
NET INCOME......................... 1,686 2,673 5,387 9,800 4,035 5,783 8,476 11,251
DEPRECIATION AND AMORTIZATION...... 13,064 12,573 12,292 12,823 13,233 13,645 14,854 15,817
DEFERRED TAXES..................... (2,462) (2,986) (851) (2,570) (4,112) (197) (566) (603)
DEFERRED RENT/OTHER................ 4,625 4,612 849 559 9,545 (110) 324 229
WORKING CAPITAL.................... 1,617 3,216 764 4,414 (2,304) 2,336 (502) 1,242
------- ------- ------- ------- ------- ------- ------- -------
OPERATIONS..................... 18,530 20,088 18,441 25,026 20,397 21,457 22,585 27,936
------- ------- ------- ------- ------- ------- ------- -------
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (22,746) (11,697) (12,141) (16,192) (35,954) (20,864) (19,767) (11,009)
INVESTMENT IN JOINT VENTURE........ 0 0 0 0 0 0 0 0
OTHER (capitalized interest)....... 0 0 0 0 0 (261) (292) (158)
------- ------- ------- ------- ------- ------- ------- -------
INVESTING...................... (22,746) (11,697) (12,141) (16,192) (35,954) (21,125) (20,059) (11,168)
------- ------- ------- ------- ------- ------- ------- -------
FINANCING:
EQUITY............................. 76 295 127 1,556 2,523 190 (0) 0
TERM/SECURED NOTES................. (3,404) 0 25,640 (3,680) (3,680) (18,280) 0 0
MET LIFE MORTGAGE NOTES............ 0 4,979 (183) (200) (218) (238) (260) (283)
NEW SENIOR DEBT.................... 0 0 0 0 0 53,643 (6,492) (8,265)
NOTE PAYABLE--BANK, NET............ 15,513 3,217 (28,360) (3,165) 23,205 (22,776) 4,333 (8,254)
CAPITAL LEASE OBLIGATIONS.......... (0) (0) (189) (202) (177) (36) (3) (4)
SALE/LEASEBACK FUNDING............. 0 0 0 0 0 35,000 0 0
TREASURY STOCK..................... (7,753) (9,224) (2,791) (4,421) (6,060) (47,900) 0 0
------- ------- ------- ------- ------- ------- ------- -------
FINANCING...................... 4,739 (733) (5,756) (10,112) 15,593 (397) (2,422) (16,806)
------- ------- ------- ------- ------- ------- ------- -------
CASH CHANGE........................ 523 (342) 544 (1,278) 36 (65) 104 (38)
BEGINNING CASH..................... 1,305 1,828 1,486 2,030 752 788 724 828
------- ------- ------- ------- ------- ------- ------- -------
ENDING CASH........................ 1,828 1,486 2,030 752 788 724 828 790
======= ======= ======= ======= ======= ======= ======= =======
PROJECTIONS
------------------------------
2004 2005 2006
-------- -------- --------
OPERATIONS:
NET INCOME......................... 13,053 15,135 16,952
DEPRECIATION AND AMORTIZATION...... 16,613 17,632 18,935
DEFERRED TAXES..................... (641) (681) (723)
DEFERRED RENT/OTHER................ 249 269 298
WORKING CAPITAL.................... 446 592 748
------- ------- -------
OPERATIONS..................... 29,720 32,947 36,211
------- ------- -------
INVESTING:
CAPITAL EXPENDITURES (Net of
dispositions).................... (14,611) (16,919) (24,155)
INVESTMENT IN JOINT VENTURE........ 0 0 0
OTHER (capitalized interest)....... (192) (222) (317)
------- ------- -------
INVESTING...................... (14,803) (17,141) (24,472)
------- ------- -------
FINANCING:
EQUITY............................. (0) 0 0
TERM/SECURED NOTES................. 0 0 0
MET LIFE MORTGAGE NOTES............ (309) (337) (368)
NEW SENIOR DEBT.................... (9,165) (10,165) (5,415)
NOTE PAYABLE--BANK, NET............ (5,463) 0 0
CAPITAL LEASE OBLIGATIONS.......... (4) (4) (5)
SALE/LEASEBACK FUNDING............. 0 0 0
TREASURY STOCK..................... 0 0 0
------- ------- -------
FINANCING...................... (14,942) (10,507) (5,788)
------- ------- -------
CASH CHANGE........................ (25) 5,299 5,952
BEGINNING CASH..................... 790 765 6,064
------- ------- -------
ENDING CASH........................ 765 6,064 12,016
======= ======= =======
52
OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE
Pursuant to a letter agreement dated November 6, 2000 (the "Engagement
Letter"), Adams, Harkness & Hill was retained by the special committee to render
a fairness opinion as to the fairness, from a financial point of view, of the
consideration to be received by Uno stockholders other than the Continuing
Stockholders in connection with the merger. Adams, Harkness & Hill is a
nationally recognized investment banking firm and is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, private placements and valuations for
corporate and other purposes.
Pursuant to the terms of the Engagement Letter, Uno paid Adams, Harkness &
Hill a retainer fee of $25,000 and a fee of $250,000 upon the delivery of its
written fairness opinion dated April 4, 2001 (which fee was payable regardless
of the conclusions expressed therein). Uno also agreed to reimburse Adams,
Harkness & Hill for all reasonable fees and disbursements of its counsel and all
of its reasonable travel and other out-of-pocket expenses arising in connection
with its engagement. In addition, Uno agreed to indemnify Adams, Harkness & Hill
and its affiliates to the full extent permitted by law against liabilities
relating to or arising out of its engagement, except for liabilities found to
have resulted from the bad faith, willful misconduct or gross negligence of
Adams, Harkness & Hill. The merger agreement provides that a condition to the
obligations of Uno to complete the merger is the affirmation of Adams,
Harkness & Hill's opinion on or within five days prior to the special meeting of
stockholders.
Prior to the delivery of its fairness opinion dated April 4, 2001, Adams,
Harkness & Hill reviewed a copy of the latest draft of the merger agreement.
Subsequently, Adams, Harkness & Hill also reviewed a copy of the executed merger
agreement dated April 19, 2001.
OPINION OF ADAMS, HARKNESS & HILL
At the meeting of the special committee on April 4, 2001, Adams, Harkness &
Hill rendered its opinion, in writing, that, as of that date, based upon and
subject to the various considerations set forth in the opinion, the
consideration to be received pursuant to the merger agreement was fair, from a
financial point of view, to the holders of shares of Uno common stock other than
the Continuing Stockholders.
THE FULL TEXT OF THE OPINION OF ADAMS, HARKNESS & HILL DATED APRIL 4, 2001,
WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED,
MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF THE REVIEW UNDERTAKEN BY
ADAMS, HARKNESS & HILL IN RENDERING ITS OPINION, IS ATTACHED AS EXHIBIT C TO
THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. STOCKHOLDERS ARE
URGED TO, AND SHOULD, READ THE OPINION CAREFULLY AND IN ITS ENTIRETY. THE
OPINION AND PRESENTATIONS OF ADAMS, HARKNESS & HILL ARE AVAILABLE FOR INSPECTION
AND COPYING AT UNO'S EXECUTIVE OFFICES DURING REGULAR BUSINESS HOURS. ADAMS,
HARKNESS & HILL'S OPINION IS DIRECTED TO THE SPECIAL COMMITTEE AND ADDRESSES
ONLY THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED BY THE UNO STOCKHOLDERS
OTHER THAN THE CONTINUING STOCKHOLDERS, PURSUANT TO THE MERGER AGREEMENT, FROM A
FINANCIAL POINT OF VIEW AS OF APRIL 4, 2001, AND DOES NOT ADDRESS ANY OTHER
ASPECT OF THE MERGER OR CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF COMMON
STOCK AS TO HOW TO VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE OPINION OF
ADAMS, HARKNESS & HILL SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
The following is a summary of the various sources of information and
valuation methodologies used by Adams, Harkness & Hill in arriving at its
opinion. To assess the fairness of the transaction,
53
Adams, Harkness & Hill employed analyses based on the following standard
assessments of financial performance:
- The financial performance and relative valuations of public company peers,
chosen for metric-based implied public trading values for companies
possessing similar strategic and operating characteristics;
- Relative valuation and transaction premiums associated with selected
precedent acquisitions, chosen for metric-based implied transaction values
for companies possessing similar strategic and operating characteristics;
- Absolute and relative stock price performance, chosen for an absolute and
relative comparison with companies possessing similar strategic and
operating characteristics; and
- Discounted cash flow analysis, chosen for assessment of forecasts based on
prior performance and industry variable at various discount rates.
In conducting its investigation and analysis and in arriving at its opinion,
Adams, Harkness & Hill reviewed the information and took into account the
investment, financial and economic factors it deemed relevant and material under
the circumstances. The material actions undertaken by Adams, Harkness & Hill in
its capacity as financial advisor to the special committee were as follows:
- Reviewed publicly-available information, including but not limited to
Uno's recent filings with the Securities and Exchange Commission;
- Reviewed internal financial information prepared by Uno's management
concerning the current status of Uno's business and historical financial
performance, including interim financial performance data (including
monthly same store sales trends) not yet disclosed to the public;
- Reviewed internal financial information prepared by Uno's management
concerning the projected performance of Uno assuming the merger is not
completed (and assuming the current public ownership and capital
structure) (the "Going Concern Projections");
- Reviewed internal financial information prepared by Uno's management
concerning the projected performance of Uno assuming the merger is
completed (the "Merger Projections");
- Held discussions with members of Uno's senior management concerning Uno's
historical and current financial condition and operating results, as well
as its future prospects (as reflected by both the Going Concern
Projections and the Merger Projections);
- Held discussions with Aaron D. Spencer concerning the merger and his
intentions and objectives regarding his majority ownership position and
Uno's future;
- Held discussions with the special committee concerning the evaluation by
the board of directors of various means of enhancing stockholder value,
including the unsuccessful public offering of Uno's common stock in 1999
and prior informal proposals by Mr. Spencer to acquire Uno in a leveraged
transaction;
- Compared the historical stock market prices and trading activity of Uno's
common stock with those of other publicly traded companies that Adams,
Harkness & Hill deemed relevant;
- Compared the financial position and operating results of Uno with those of
other publicly traded companies that Adams, Harkness & Hill deemed
relevant;
- Compared the proposed financial terms of the merger with the terms of
other change of control transactions that Adams, Harkness & Hill deemed
relevant, including certain transactions involving controlling
shareholders;
54
- Reviewed the terms of the financing proposal for the merger made to the
Continuing Stockholders by Fleet National Bank (noting that the proposal
allowed for up to $10.00 per share cash consideration to the minority
stockholders);
- Reviewed the merger agreement in its draft form, as dated March 14, 2001;
- Reviewed relevant industry market research studies, investment research
reports for Uno's competitors, and key economic and market indicators,
including interest rates, commodities prices and general stock market
performance; and
- Contacted, with the permission of and under limitations set by the special
committee, six national restaurant chains and four financial investors to
solicit and qualify their interest in a negotiated acquisition of Uno. See
"--Limited Solicitation of Potential Acquirors."
Other than as set forth above, Adams, Harkness & Hill did not review any
additional information in preparing its opinion that, independently, was
material to its analysis. The special committee did not place any limitation,
other than those associated with the solicitation of potential acquirors, upon
Adams, Harkness & Hill with respect to the procedures followed or factors
considered by Adams, Harkness & Hill in rendering its opinion. In rendering its
opinion, Adams, Harkness & Hill assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided to Adams, Harkness & Hill by, or on behalf of, Uno, and
did not independently verify such information. Adams, Harkness & Hill assumed,
with the special committee's consent, that:
- All material assets and liabilities (contingent or otherwise, known or
unknown) of Uno as set forth in its financial statements are accurate;
- Obtaining any regulatory and other approvals and third party consents
required for completion of the merger would not have a material effect on
the anticipated benefits of the merger; and
- The draft of the merger agreement reviewed by Adams, Harkness & Hill would
conform in all material respects to the merger agreement in its final
form, and that the merger would be completed in accordance with the terms
set forth in the merger agreement in its final form, without any amendment
thereto and without waiver by Uno of any of the conditions to their
respective obligations thereunder.
Adams, Harkness & Hill also assumed, with the special committee's consent,
that both the Going Concern Projections and the Merger Projections were
reasonably prepared and based upon the best available estimates and good faith
judgments of Uno's management as to the future performance of Uno under either
scenario. The Going Concern Projections and the Merger Projections were
substantively similar, reflecting the same operating assumptions and general
competitive and market conditions, with the primary exception being the
significantly higher debt level assumed in the Merger Projections, and the
subsequent redirection of free cash flow for debt service. Given the use of cash
in the Merger Projections for debt service, new store openings are curtailed
and, accordingly, year to year revenue growth is lower in the Merger
Projections.
In conducting its review, Adams, Harkness & Hill did not obtain an
independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of Uno. The valuation analyses conducted by Adams,
Harkness & Hill in rendering its opinion (specifically, the discounted cash flow
analysis, the historical stock price performance analysis, the transaction
premiums paid analysis, and the peer group analysis) constituted a "going
concern" analysis of Uno. Adams, Harkness & Hill's opinion did not predict or
take into account any possible economic, monetary or other changes which may
occur, or information which may come available, after the date of its written
opinion.
55
PUBLIC COMPANY PEER ANALYSIS
Uno owns and operates 113 and franchises 67 casual dining, full-service
restaurants operating primarily under the name Pizzeria Uno ... Chicago Bar &
Grill. The restaurants feature Uno's signature Chicago-style, deep-dish pizza
and a selection of baked, grilled and sauteed entrees, including gourmet thin
crust pizza, pasta, fajitas, ribs, steak and chicken, as well as a variety of
appetizers, salads, sandwiches and desserts. Company-owned restaurants are
located primarily in major metropolitan markets from New England to Virginia, as
well as Florida, Chicago and Denver, and franchised restaurants are located
throughout the United States and Puerto Rico as well as Seoul, Korea, Lahor,
Pakistan and Dubai, United Arab Emirates. Uno also operates a consumer products
business that distributes Uno's branded and non-branded, Chicago-style deep-dish
pizza, calzones, and other pizza products in hotels, movie theater chains,
supermarkets, food courts and airports.
Adams, Harkness & Hill identified a group of publicly traded companies in
the restaurant industry that it deemed comparable to Uno based on their similar
full-service, casual dining strategy, the markets served, and their financial
performance (collectively, the "Peer Group Companies" or "Peer Group"). Adams,
Harkness & Hill identified and evaluated 25 public companies in the casual
dining segment that it considered to be relatively similar to Uno, but
acknowledging Uno's relatively small public market capitalization (i.e., the
value of all common shares outstanding) and the relative valuation discount
generally associated with companies possessing small public market
capitalization, focused its analysis on the 10 companies with a market
capitalization of less than $250 million. Adams, Harkness & Hill noted that
Uno's market capitalization had never exceeded $250 million since becoming a
public company in March of 1987. Adams, Harkness & Hill also noted the generally
lower profitability (as defined by the last 12 months operating margin) of these
10 companies, primarily reflecting the impact of their smaller size on their
ability to achieve economies of scale.
Adams, Harkness & Hill compared certain financial measures and metrics of
Uno with those of the Peer Group Companies. Such information included:
- Market Capitalization ("MC");
- Enterprise Value ("EV");
- Last Twelve Months ("LTM") Revenue;
- LTM Operating Margin;
- Enterprise Value / LTM Revenue;
- Price / Historical LTM Earnings Per Share Ratio ("Trailing LTM P/E");
- Price / Projected Calendar 2001 Earnings Per Share Ratio ("Forward 2001
P/E"); and
- Price / Book Value Per Share Ratio ("Trailing LTM P/E").
All financial measures and metrics involving Peer Group Companies' common
stock prices per share are as of the close of trading of April 3, 2001, one day
prior to the date of Adams, Harkness &
56
Hill opinion. In addition, all data is in millions unless otherwise labeled or
noted. The Peer Group, made up of companies possessing public market
capitalization of less than $250 million, consists of:
MARKET ENTERPRISE LTM LTM OPERATING
COMPANY CAPITALIZATION(A) VALUE(A) REVENUE(B) MARGIN(B)
- ------- ----------------- ---------- ---------- -------------
Avado Brands, Inc........................... $ 18.6 $324.7 $685.8 NM(d)
Champps Entertainment, Inc.................. $ 89.3 $ 98.7 $122.8 5.9%
Chart House Enterprises, Inc................ $ 30.1 $ 59.6 $141.7 1.2%
Chicago Pizza & Brewery, Inc................ $ 19.0 $ 23.6 $ 52.3 2.0%
Dave & Busters, Inc......................... $109.1 $209.8 $332.3 8.4%
Famous Dave's of America, Inc............... $ 35.4 $ 43.4 $ 70.2 3.7%
Lone Star Steakhouse & Saloon............... $229.0 $199.9 $575.9 3.7%
Max & Erma's, Inc........................... $ 22.2 $ 59.1 $131.0 3.7%
Morton's Restaurant Group, Inc.............. $ 89.8 $177.3 $248.4 8.4%
Roadhouse Grill, Inc........................ $ 15.4 $ 53.3 $167.4 NM(e)
Mean(c)..................................... $ 65.8 $124.9 $252.8 4.6%
Median(c)................................... $ 32.7 $ 79.1 $154.6 3.7%
Uno Restaurant Corporation(d)............... $109.2 $165.1 $238.3 7.3%
- ------------------------
(a) Market Capitalization and Enterprise Value derived from share prices as of
the close of trading on April 3, 2001 and fully diluted shares outstanding
and debt figures taken from each respective company's most recent Quarterly
Report on Form 10-Q or Annual Report on Form 10-K filed prior to April 3,
2001.
(b) LTM Revenue and Operating Margin data obtained from each respective
company's most recent Quarterly Report on Form 10-Q or Annual Report on 10-K
filed prior to April 3, 2001.
(c) Mean and median calculations are based on Peer Group Companies and do not
include Uno.
(d) All data presented reflects the consideration offered in the merger.
(e) NM = Not meaningful. Avado Brands and Roadhouse Grill have negative
operating margins and are not included in calculating the mean and median.
Adams, Harkness & Hill concluded that publicly-traded companies in the
casual dining segment of the restaurant industry are valued primarily on the
bases of historical and projected revenue growth, profitability and overall
size, all of which are reflected in the individual company's ratio of Enterprise
Value to LTM Revenue ("EV / LTM Revenue") and the multiple of Price to Earnings
("P/E"). Adams, Harkness & Hill employed an EV-based valuation in this analysis
because this methodology implies value based on a company's operations,
regardless of how the company finances those operations. To determine EV, MC is
calculated as the product of a company's common stock price per share (Adams,
Harkness & Hill used the closing price on April 3, 2001 for all public company
comparative analyses) multiplied by the number of diluted shares outstanding.
The MC is then adjusted for a company's debt and cash positions by adding the
debt balance and subtracting the cash balance to arrive at an EV. Unlike
EV-based valuation methodologies, P/E-based valuation methodologies imply a
value based on net after-tax earnings inclusive of the earnings impact of how
the company finances its operations. The following equation illustrates the
manner in which EV has been calculated:
EV = ((market value of equity) + (debt)) - (cash, cash equivalents and
short-term investments)
57
In descending order of EV / LTM Revenue, the Peer Group Companies, inclusive
of Uno, ranked as follows:
COMPANY EV / LTM REVENUE (A),(B)
- ------- ------------------------
Champps Entertainment, Inc............................. 0.8x
Morton's Restaurant Group, Inc......................... 0.7x
Dave & Busters, Inc.................................... 0.6x
Famous Dave's of America, Inc.......................... 0.6x
Avado Brands, Inc...................................... 0.5x
Chicago Pizza & Brewery, Inc........................... 0.5x
Max & Erma's, Inc...................................... 0.5x
Chart House Enterprises, Inc........................... 0.4x
Lone Star Steakhouse & Saloon.......................... 0.3x
Roadhouse Grill, Inc................................... 0.3x
Mean................................................... 0.5x
Median................................................. 0.5x
Uno Restaurant Corporation (c)......................... 0.7x
- ------------------------
(a) Enterprise Value derived from share prices as of close of trading on
April 3, 2001 and fully diluted shares outstanding and debt figures taken
from each company's Quarterly Report on Form 10-Q filed prior to April 3,
2001.
(b) LTM data obtained from each respective company's most recent Quarterly
Report on Form 10-Q filed prior to April 3, 2001.
(c) All data presented reflects the consideration offered in the merger.
Adams, Harkness & Hill noted Uno's EV / LTM Revenue multiple implied in the
merger proposal exceeded both the mean and the median of the Peer Group. Adams,
Harkness & Hill also noted Uno's EV/LTM Revenue multiple had historically lagged
behind the mean and median multiple of the Peer Group. This reflects Uno's
historically lower revenue and earnings growth, as well as the variability of
revenue and earnings. Adams, Harkness & Hill noted Uno's EV/LTM Revenue multiple
was .58 on October 23, 2000, two days prior to the public announcement of the
Continuing Stockholders' initial offer to take Uno private at a per share
purchase price of $8.75. Adams, Harkness & Hill considered October 23, 2000 the
appropriate date for the comparison of financial metrics and implied premiums
paid in its analysis, because there was a disproportionately high trading volume
and a material increase in Uno's share price on October 24, 2000, reflecting
what Adams, Harkness & Hill believes to be speculative trading based on rumors
of the initial offer.
58
In descending order of Trailing LTM P/E (where earnings per share estimates
were available), the Peer Group, inclusive of Uno, is ranked as follows:
COMPANY TRAILING LTM P/E (A),(B)
- ------- ------------------------
Famous Dave's of America, Inc........................... 16.8x
Lone Star Steakhouse & Saloon........................... 14.2x
Champps Entertainment, Inc.............................. 13.7x
Max & Erma's, Inc....................................... 12.1x
Chicago Pizza & Brewery, Inc............................ 9.8x
Dave & Busters, Inc..................................... 8.9x
Morton's Restaurant Group, Inc.......................... 8.9x
Avado Brands, Inc....................................... NM
Chart House Enterprises, Inc............................ NM
Roadhouse Grill, Inc.................................... NM
Mean (c)................................................ 12.1x
Median (c).............................................. 12.1x
Uno Restaurant Corporation (d).......................... 11.3x
- ------------------------
(a) Share prices as of close of trading on April 3, 2001. Trailing LTM P/E data
obtained from each respective company's most recent Quarterly Report on
Form 10-Q filed prior to April 3, 2001.
(b) NM = Not meaningful. In the case of Price/Earnings ratios, the companies
noted as NM did not have earnings and were not included in calculating the
mean and median.
(c) Mean and median calculations are based on Peer Group Companies and do not
include Uno.
(d) All data presented reflects the consideration offered in the merger.
In descending order of Forward 2001 P/E (where earnings per share estimates
were available), the Peer Group Companies, inclusive of Uno, are ranked as
follows:
COMPANY FORWARD 2001E P/E(A)
- ------- --------------------
Max & Erma's, Inc......................................... 12.5x
Champps Entertainment, Inc................................ 10.1x
Lone Star Steakhouse & Saloon............................. 10.1x
Famous Dave's of America, Inc............................. 8.6x
Morton's Restaurant Group, Inc............................ 8.6x
Dave & Busters, Inc....................................... 5.2x
Avado Brands, Inc......................................... NA
Chart House Enterprises, Inc.............................. NA
Chicago Pizza & Brewery, Inc.............................. NA
Roadhouse Grill, Inc...................................... NA
Mean (b).................................................. 9.2x
Median (b)................................................ 9.4x
Uno Restaurant Corporation (c)(d)......................... 11.5x
- ------------------------
(a) Forward earnings estimates obtained from I/B/E/S International, Inc. and
Zacks Investment Research, Inc. where available, if not available then "NA."
Those companies without available forward earnings estimates are marked NA
and not included in the calculation of the mean and median. Share prices as
of close of trading on April 3, 2001.
(b) Mean and median calculations are based on Peer Group Companies and do not
include Uno.
(c) All data presented reflects the consideration offered in the merger.
(d) Based on estimates provided by Uno management.
59
Adams, Harkness & Hill noted Uno's Trailing LTM P/E as reflected in the
merger proposal was below both the mean and median of the Peer Group. Adams,
Harkness & Hill noted that Uno's Forward 2001 P/E as reflected in the merger
proposal was above both the mean and median of the Peer Group. Adams,
Harkness & Hill noted the mean and median ratio generally compared favorably to
P/E ratios achieved by Uno's in the past, reflecting Uno's historically lower
earnings growth, as well as the variability of earnings.
To arrive at Uno's Trailing LTM P/E and Forward 2001 P/E, Adams, Harkness &
Hill used Uno's internal management projections, as Uno is no longer covered by
independent institutional research analysts, and, as such, externally developed
projections are not available. Adams, Harkness & Hill noted the absence of such
institutional research coverage likely increases the difficulty for investors to
perform analyses, because investors have no sources of third-party analysis upon
which to base investment decisions.
In descending order of Price / Book Value Per Share, the Peer Group
Companies, inclusive of Uno, ranked as follows:
COMPANY PRICE / BOOK VALUE PER SHARE (A),(B)
- ------- ------------------------------------
Max & Erma's, Inc............................... 1.00x
Champps Entertainment, Inc...................... .22x
Chicago Pizza & Brewery, Inc.................... .16x
Famous Dave's of America, Inc................... .12x
Chart House Enterprises, Inc.................... .06x
Dave & Busters, Inc............................. .05x
Roadhouse Grill, Inc............................ .03x
Lone Star Steakhouse & Saloon................... .02x
Avado Brands, Inc............................... .01x
Morton's Restaurant Group, Inc.................. NM
Mean(c)......................................... .19x
Median(c)....................................... .06x
Uno Restaurant Corporation(d)................... .12x
- ------------------------
(a) Share prices as of close of trading on April 3, 2001. Book Value calculated
from and as of each respective company's most recent Quarterly Report on
Form 10-Q or Annual Report on Form 10-K filed prior to April 3, 2000.
(b) NM = Not meaningful. In the case of Price/Book Value Per Share ratios, the
companies with NM did not have positive book value.
(c) Mean and median calculations are based on Peer Group Companies and do not
include Uno.
(d) All data presented reflects the consideration offered in the merger.
Adams, Harkness & Hill noted Uno's multiple of Price to Book Value Per Share
is just below the mean value of the Peer Group and is above the median of the
Peer Group. Because companies in the restaurant industry utilize various methods
of financing their restaurant operations, both on balance sheet and off balance
sheet, Adams, Harkness & Hill advised the special committee that it did not
believe the multiple of Price to Book Value Per Share was relevant to its
analysis. Further, Adams, Harkness & Hill noted Uno's intention to sell and
leaseback certain restaurants that would generate approximately $25 million in
proceeds to be used for debt reduction.
60
PRECEDENT TRANSACTION ANALYSIS
Adams, Harkness & Hill assessed the transaction premiums and relative
valuation associated with selected precedent publicly disclosed acquisitions it
deemed relevant to its inquiry. In particular, Adams, Harkness & Hill reviewed
29 precedent transactions (the "Precedent Transactions") involving selected
restaurant companies from November 1995 to November 2000 and involving the
acquisition of the equity shares of publicly-traded companies for which share
price data was available. The precedent transaction analysis includes companies
that possess similar strategic and operating characteristics. In addition, the
transactions that were assessed represented change in control transactions.
These transactions involve restaurants, which meet the strategic and operating
characteristics threshold, involve public companies that are/were going-private
to meet the change in control criteria, and a number of these transactions
involved the purchase by controlling owners effecting a going-private
transaction.
Premiums paid in precedent public company change of control transactions
typically imply the range of consideration acquirors are willing to pay above a
seller's stock price prior to the announcement of the relevant transaction. In
descending order of premiums paid based on the seller's stock price one trading
day prior to the announcement of the transaction, the selected transactions
analyzed by Adams, Harkness & Hill were:
ANNOUNCEMENT TRANSACTION ONE DAY ONE WEEK FOUR WEEK
TARGET ACQUIROR DATE VALUE(A) PREMIUM(A) PREMIUM(A) PREMIUM(A)
------ ----------------------- ------------- ----------- ----------- ----------- -----------
Taco Cabana, Inc............. Carrols Corp. 10/26/00 $151.4 118% 110% 100%
Spaghetti Warehouse, Inc..... Consolidated Restaurant
Companies, Inc. 9/18/98 $ 54.3 79% 70% 47%
Timber Lodge Steakhouse...... Santa Barbara
Restaurant Group 12/12/97 $ 30.4 74% 74% 81%
Rainforest Cafe, Inc.(b)..... Landry's Seafood
Restaurants 9/26/00 $ 70.8 60% 58% 14%
Rudy's Restaurant Group...... Benihana, Inc. 7/23/97 $ 18.8 51% 70% 72%
Il Fornaio America Corp.*.... Bruckmann Rosser
Sherrill & Co. 11/16/00 $ 91.2 50% 45% 68%
DavCo Restaurants(c)......... Investor Group 9/5/97 $133.6 50% 50% 50%
NPC International, Inc....... Investor Group 12/13/00 $ 94.5 44% 44% 33%
VICORP Restaurants, Inc.*.... Investor Group 2/15/01 $174.2 36% 35% 51%
Bertucci's, Inc.............. NE Restaurant Co Inc 4/3/98 $ 96.5 35% 35% 35%
Mike's Restaurants,
Inc.(d).................... Pizza Delight Corp. 10/30/00 $ 14.5 30% 24% 16%
Perkins Family Restaurant,
LP......................... The Restaurant Company 8/4/97 $ 76.3 29% 27% 32%
El Chico Restaurants......... Investor Group 9/23/97 $ 49.2 21% 17% 26%
PJ America, Inc.*(e)......... Investor Group 3/23/01 $ 22.7 21% 43% 16%
Quizno's Corp.*.............. Quizno's Corp. 11/13/00 $ 11.7 19% 19% 24%
Sagebrush, Inc............... WSMP, Inc. 9/26/97 $ 39.4 16% 13% 21%
Buffets, Inc................. Caxton-Iseman Capital 6/5/00 $ 643 14% 26% 23%
Logans Roadhouse, Inc........ Cracker Barrel Old
Country Store, Inc. 12/11/98 $178.3 14% 10% 34%
Back Bay Restaurants......... SRC Holdings 12/3/98 $ 38.9 12% 14% 28%
International Dairy Queen, Berkshire Hathaway,
Inc........................ Inc. 10/21/97 $596.9 12% 9% 9%
Bayport Restaurant Group..... Landry's Seafood
Restaurants 4/20/96 $ 74.1 11% 29% 20%
Pollo Tropical, Inc.......... Carrols Corp. 6/4/98 $ 94.6 10% 7% 18%
Bugaboo Creek Steak House,
Inc........................ Longhorn Steaks, Inc. 6/14/96 $ 48.5 9% 16% 11%
Sbarro, Inc.(f).............. Investor Group 11/25/98 $386.4 8% 10% 8%
NPC International, Inc.*..... Investor Group 12/13/00 $ 88.3 7% 9% 31%
BFX Hospitality Group, Hospitality Concepts,
Inc........................ LLC 8/12/00 $ 8.9 6% 6% 6%
61
ANNOUNCEMENT TRANSACTION ONE DAY ONE WEEK FOUR WEEK
TARGET ACQUIROR DATE VALUE(A) PREMIUM(A) PREMIUM(A) PREMIUM(A)
------ ----------------------- ------------- ----------- ----------- ----------- -----------
HomeTown Buffet, Inc......... Buffets, Inc. 6/4/96 $174.0 -3% 7% 3%
Koo Koo Roo, Inc.(g)......... Family Restaurants,
Inc. 6/10/98 $158.0 -15% -7% -3%
- ------------------------------
* Denotes transactions announced, but not yet closed.
(a) All Transaction Values are in millions and all Transaction Value statistics
and premia information are from Securities Data Company, Inc., or each of
the respective company's most recent Quarterly Report on Form 10-Q or Annual
Report on Form 10-K filed prior to the respective acquisition.
(b) Excludes a one-time impairment charge of $101.5 million incurred in the
quarter ended July 2, 2000.
(c) Insider purchased 45% of company not already owned.
(d) Amount of debt used to calculate data is taken from the company's Annual
Report on Form 10-K. The company's most recent Quarterly Report on
Form 10-Q does not provide debt data. Converted into US dollars from
Canadian dollars at a rate of .66 Canadian dollars to 1 US dollar.
(e) Excludes one time expenses of $9.5 million.
(f) An offer from the Sbarro family to purchase 65% of the company they did not
own.
(g) Excludes one time charges for store closings and $11.8 million in
restructuring charges.
Based upon Adams, Harkness & Hill's analysis of premiums paid in selected
precedent transactions, the mean and median premiums (discounts) paid in
relation to sellers' share prices (using the buyer's share price on the day
prior to the announcement date of the transaction to calculate consideration in
stock transactions) along with the implied premium offered by the merger
consideration in relation to Uno's share price for the day, week and month prior
are listed below:
ONE ONE FOUR
DAY WEEK WEEK
PREMIUM(A) PREMIUM(A) PREMIUM(A)
---------- ---------- ----------
Mean....................................... 29% 30% 31%
Median..................................... 20% 24% 25%
Uno(b)..................................... 44% 38% 22%
- ------------------------
(a) All premia information is from Securities Data Company, Inc. or calculated
from trading statistics and deal value on a price per share basis.
(b) Based on the price of Uno's common stock on October 23, 2000 rather than
October 24, 2000 because of unusual trading activity in Uno common stock on
October 24, 2000.
Adams, Harkness & Hill noted the premium reflected in the merger proposal
was above the one day mean and median premium, and the one week mean and median
premium implied by the Precedent Transactions. Adams, Harkness & Hill also noted
that the four week premium reflected in the merger proposal was below the mean
and median implied by the Precedent Transactions.
62
The following table sets forth a summary of the ranges of financial
multiples and ratios associated with the Precedent Transactions compared to the
corresponding multiple or ratio implied by the proposed merger consideration:
HIGH MEAN MEDIAN UNO
VALUE VALUE VALUE LOW VALUE OFFER (A)
-------- -------- -------- --------- ---------
Transaction Value(b).............................. $643.0 $124.9 $76.3 $8.8 $97.7
Transaction Value / LTM Revenue(c)................ 2.0x 0.9x 0.8x 0.2x 0.4x
Target EV / LTM Operating Income(c,d)............. 77.3x 18.6x 14.8x 4.9x 9.5x
Target EV / LTM EBITDA(c,d)....................... 37.3x 9.9x 7.4x 2.5x 5.4x
Target MC / LTM Net Income(c,d)................... 255.4x 30.5x 15.9x 5.4x 11.3x
- ------------------------
(a) Transaction Value for Uno offer is estimated at 38% of the total number of
shares outstanding at $9.75 per share plus $56.2 million in outstanding
debt.
(b) Transaction Values are in millions.
(c) All data obtained from Securities Data Company, Inc. or each of the
respective company's most recent Quarterly Report on Form 10-Q or Annual
Report on Form 10-K filed prior to the respective acquisition.
(d) Price per share data used to calculate each company's MC and EV for the
respective multiples are the companies' share prices one day prior to the
announcement, or in the case of Uno, October 23, 2000 because of the unusual
trading activity in Uno common stock on October 24, 2000.
Adams, Harkness & Hill noted that the financial ratios reflected in the
merger proposal fall below the mean and median values for the Precedent
Transactions.
STOCK PRICE PERFORMANCE ANALYSIS
Adams, Harkness & Hill examined the following common stock closing price
data for Uno:
1) Price performance from Uno's initial public offering on March 30, 1997
through October 23, 2000 and April 3, 2001, compared to the performance of
the NASDAQ Composite and S&P 500 index, and;
2) Price performance from January 1, 1999, through October 23, 2000 and
April 3, 2001, compared to the S&P Small Cap Restaurant index and the Peer
Group Companies index.
Based on the above analyses, Adams, Harkness & Hill observed that, from
Uno's initial public offering on March 30, 1987 through October 23, 2000, Uno's
per share price had decreased 28.6%. During the same time period, the NASDAQ
composite increased 712.1% and the S&P 500 index increased 382.6%. Adams,
Harkness & Hill also observed that, from Uno's initial public offering on
March 30, 1987 through April 3, 2001, Uno's per share price had increased 8.0%.
During that same period, the NASDAQ composite increased 291.8% and the S&P 500
index increased 282.6%. On July 16, 1999, Uno's share price reached an all-time
high at $12.67 per share, which represents an annual growth rate since the
initial public offering of 3.7%.
Further, Adams, Harkness & Hill observed that Uno's per share price had
decreased 13% from January 1, 1999 through October 23, 2000, compared to an
increase of 14% in the S&P Small Cap Restaurant Index and a 45% decrease in the
Peer Group Companies index over the same time period. Adams, Harkness & Hill
also observed that Uno's per share price had increased 33% from January 1, 1999,
through April 3, 2001, compared to an increase of 30% in the S&P Small Cap
Restaurant Index and a 41% decrease in the Peer Group Companies index over the
same time period.
63
Adams, Harkness & Hill used price information on October 23, 2000 in these
calculations rather than October 24, 2000, the day before the public
announcement, because of the unusual trading activity in Uno common stock on
October 24, 2000, reflecting what Adams, Harkness & Hill believes to be
speculative trading based on rumors of the initial offer.
DISCOUNTED CASH FLOW ANALYSIS
Adams, Harkness & Hill performed a discounted cash flow analysis to estimate
the present value of the stand-alone unlevered (i.e., before interest expense)
after-tax cash flows of Uno. To perform this analysis, Adams, Harkness & Hill
used the following assumptions and the following sources for data:
- Uno Management's financial projections, assuming the merger is completed,
for the fiscal year ended September 30, 2001 through the year ended
October 2, 2005.
- Uno's unlevered after-tax cash flows were calculated as the after-tax
operating earnings of Uno adjusted for the addition of non-cash expenses
and the deduction of uses of cash not reflected in the income statement.
- Uno's weighted-average cost of capital ranging from 13.0% to 15.0%.
- Terminal value based on Uno's earnings before interest, taxes,
depreciation and amortization ("EBITDA") for the fiscal year ended
October 2, 2005 multiplied by EBITDA multiples ranging from 4.0 to 6.0.
- Terminal value based on Uno's cash flow for the fiscal year ended
October 2, 2005 multiplied by a perpetual growth rate ranging from 4.0% to
6.0%.
- In order to calculate an appropriate range of terminal values, Adams,
Harkness & Hill also calculated an EV/EBITDA multiple for each of the Peer
Group Companies and arrived at a range of 3.9x to 21.3x with an average of
7.8x. Adams, Harkness & Hill noted that Uno has historically traded near
the bottom of the range. Adams, Harkness & Hill also noted that the
EV/EBITDA multiple reflected in the merger proposal is 5.4x.
Adams, Harkness & Hill combined (i) the calculated present value of Uno's
cash flows for the five fiscal years ending October 2, 2005, with (ii) Uno's
EBITDA terminal value, to arrive at a range of EVs based on the above
assumptions. These EVs were then adjusted by adding Uno's current cash balance
and subtracting its current funded debt balance to arrive at implied MCs (i.e.,
equity values). Adams, Harkness & Hill divided the computed equity values by the
number of shares of common stock outstanding and arrived at a range of implied
per share values of $6.34 to $11.54, with a median implied value of $8.84.
Adams, Harkness & Hill combined (i) the calculated present value of Uno's
cash flows for the fiscal years ended September 30, 2001 through October 2,
2005, with (ii) Uno's perpetual growth rate terminal value, to arrive at a range
of EVs based on the above assumptions. These EVs were then adjusted by adding
Uno's current cash balance and subtracting its current funded debt balance to
arrive at implied MCs (i.e., equity values). Adams, Harkness & Hill divided the
computed equity values by the number of shares of common stock outstanding and
arrived at a range of implied per share values of $4.57 to $9.13, with a median
implied value of $6.35.
64
LIMITED SOLICITATION OF POTENTIAL ACQUIRORS
The special committee instructed Adams, Harkness & Hill to contact only the
parties approved by Mr. Spencer and to provide only publicly available
information to such parties. Because of his concern about the possibility of
management distraction and negative impact from potential press coverage,
Mr. Spencer indicated that he would like to limit the number of potential buyers
to ten. The special committee placed these limitations on Adams, Harkness & Hill
because Mr. Spencer controls a majority of Uno's common stock and, therefore,
any transaction involving a sale of Uno would require Mr. Spencer's approval.
Adams, Harkness & Hill contacted, with the permission of and under the
limitations set by the special committee, six national restaurant chains and
four financial investors to solicit and qualify their interest in a negotiated
acquisition of Uno. Initial contact with potential acquirors was made without
specifically revealing Uno until the potential acquiror signed a non-disclosure
agreement. Upon receipt by Adams, Harkness & Hill of an executed non-disclosure
agreement, Adams, Harkness & Hill provided each potential acquiror with a packet
of publicly disclosed materials and engaged in additional discussions with each
of the parties to ascertain their potential interest in acquiring Uno. None of
the six national restaurant chains indicated any interest. Three of the four
financial investors indicated preliminary interest conditioned upon
Mr. Spencer's willingness to act in concert with them in acquiring Uno.
Mr. Spencer indicated to Adams, Harkness & Hill that he had no interest in
pursuing these discussions. Adams, Harkness & Hill noted that without
Mr. Spencer's participation, this alternative to the merger was not feasible.
SUMMARY OF VALUATION ANALYSES
The foregoing summary describes the material analyses performed by Adams,
Harkness & Hill. The preparation of a fairness opinion is a complex process.
Adams, Harkness & Hill believes that its analyses must be considered as a whole,
and that selecting portions of such analyses, or portions of the factors
considered by it, without considering all analyses and factors would create an
incomplete view of the evaluation processes underlying its opinion. Adams,
Harkness & Hill did not attempt to assign specific weights to particular
analyses. Any estimates contained in Adams, Harkness & Hill's analyses are not
necessarily indicative of actual values, which may be significantly more or less
favorable than suggested by the analyses. In addition, estimates of the values
of companies do not purport to be appraisals or necessarily to reflect the
prices at which companies may actually be sold. Because such estimates are
inherently subject to uncertainty, Adams, Harkness & Hill does not assume
responsibility for their accuracy. Taken together, the information and analyses
employed by Adams, Harkness & Hill led to Adams, Harkness & Hill's overall
opinion that the consideration to be received in the merger is fair, from a
financial point of view, to the stockholders of Uno other than the Continuing
Stockholders.
PURPOSE AND STRUCTURE OF THE MERGER
For Uno, the purpose of the merger is to allow Uno stockholders to realize
the value of their investment in Uno in cash at a price that represents a
premium over the market price of Uno common stock before the public announcement
of the Continuing Stockholders' initial offer to take Uno private by purchasing
all of the outstanding shares of common stock at a price of $8.75 per share. The
board of directors believes that Uno has not been able to realize fully the
benefits of public company status. The reasons for their belief include the
limited ability of Uno stockholders to sell their stock quickly at the current
market price due to the low trading volume and the significant percentage of
outstanding stock held by Mr. Spencer and the Continuing Stockholders, and the
undervaluation of the common stock in the public market due to Uno's small
market capitalization, limited public float, limited research coverage from
securities analysts and the inability to generate the type of rapid revenue and
unit growth generally expected by the public markets. At the same time, the
public company status has imposed a number of limitations on Uno and its
management in conducting Uno's operations. These limitations include the costs
and time associated with public company reporting obligations and the
65
short term focus on quarter to quarter performance goals to meet expectations of
the public markets. Accordingly, one of the purposes of the merger is to afford
greater operating flexibility, allowing management to concentrate on long-term
growth and to reduce its attention to the quarter-to-quarter performance and to
be able to pursue opportunities that Uno could not previously pursue because of
its duties to the public stockholders. Further, the merger is intended to enable
Uno to use in its operations those funds that would otherwise be expended in
complying with requirements applicable to public companies.
For the Affiliate Stockholders, Parent and Newco, the purpose of the merger
is to allow the Continuing Stockholders to acquire complete ownership of Uno and
to increase the amount of Uno owned by the Continuing Stockholders indirectly
through their ownership of Parent. As described in the "--Background of the
Merger" section, the Affiliate Stockholders, Parent and Newco believe that Uno
has strong business prospects for the future, based upon publicly available
information regarding Uno and based upon their knowledge of the restaurant
industry. The Affiliate Stockholders, Parent and Newco believe that Uno will
have greater operating flexibility to focus on its long-term value by
emphasizing growth and operating cash flow without the constraint of the public
market's emphasis on quarterly earnings. The transaction has been structured as
a merger of Newco into Uno in order to preserve Uno's identity and existing
contractual arrangements with third parties. The Affiliate Stockholders, Parent
and Newco chose to make the offer for Uno common stock now for a variety of
reasons, including: the lack of interest in Uno's proposed public offering in
1999, a lack of continuing investor interest in Uno's common stock, a
recognition by the Affiliate Stockholders, Parent and Newco that Uno has not
been able to generate the growth in revenues and earnings that would attract the
interest and following of institutional investors and research analysts, as well
as for the other reasons more fully described above in the "--Background of the
Merger" section.
The transaction has been structured as a cash merger in which Parent, Newco
and Uno as the surviving corporation will incur indebtedness to acquire all
shares of Uno common stock for cash, other than shares held by Parent. Uno's
purpose in submitting the merger to the vote of its stockholders with a
favorable recommendation at this time is to allow the stockholders other than
the Parent an opportunity to receive a cash payment at a fair price to provide a
prompt and orderly transfer of ownership of Uno to the Parent and to provide the
stockholders (other than the Parent) with cash for all of their shares of Uno
common stock.
ALTERNATIVES TO THE MERGER
On October 16, 2000, the Continuing Stockholders stated in writing their
intention to make a tender offer, subject to the receipt of financing, for all
of the outstanding shares of Uno common stock not owned by the Continuing
Stockholders. The tender offer price of $8.75 per share represented a premium of
33.4% over the market price of Uno common stock on October 24, 2000, the day
before Uno announced the Continuing Stockholders' intent to engage in a tender
offer. If the tender offer was completed, Uno would have become a privately held
corporation.
From October 2000 through mid-January 2001, the Continuing Stockholders and
the special committee of the board of directors continued to discuss the terms
of the proposed tender offer, including the price per share, conditions to the
transaction and the payment of transaction fees and expenses. On January 16,
2001, a revised written offer was submitted by the Continuing Stockholders to
the special committee in which they increased their offer price to $9.00 per
share and changed the structure of the transaction from a cash tender offer to a
cash merger. The Continuing Stockholders and their advisors indicated that they
changed the structure of the transaction from a cash tender offer to a cash
merger because most of the financing commitment fees would be paid upon
completion of the merger and not in advance of a tender offer. Other than the
initially proposed tender offer, none of Uno, the Affiliate Stockholders, Parent
and Newco, considered any transaction which would have the effect of taking Uno
private.
66
EFFECTS OF THE MERGER
Upon completion of the merger, Uno will be a privately held corporation,
wholly owned by Parent. The Continuing Stockholders will indirectly, through
their ownership of Parent, own 100% of the outstanding shares of common stock in
Uno as the surviving corporation. The holders of options to purchase shares of
Uno common stock, other than Mr. Spencer and the Management Group, will continue
as holders of options to purchase shares of common stock of Uno as the surviving
corporation. After the merger, Uno as the surviving corporation may, but has not
yet decided to, offer to repurchase and cancel outstanding stock options of Uno
as the surviving corporation. If it does, Mr. Miller intends to sell to Uno as
the surviving corporation options to purchase approximately 82,500 shares of his
Uno common stock. Options to purchase shares of Uno common stock held by
Mr. Spencer and the remaining options held by the Management Group will be
cancelled and they will receive options to purchase shares of preferred stock of
Parent. After the merger, Parent may but has not yet decided to, issue options
to purchase shares of preferred stock in Parent to additional key employees of
Uno upon the cancellation of their options to purchase shares of Uno common
stock.
As a result of the merger, Uno will be a privately held corporation, and
there will be no public market for its common stock. After the merger, the
shares of common stock will cease to be traded on the New York Stock Exchange,
and price quotations of sales of shares of common stock in the public market
will no longer be available. In addition, registration of the common stock under
the Securities Exchange Act of 1934, as amended, will be terminated. This
termination will make most provisions of the Securities Exchange Act of 1934, as
amended, such as the short-swing profit recovery provisions of Section 16(b) and
the requirement of furnishing a proxy or information statement in connection
with stockholders' meetings, no longer applicable to Uno. After the effective
time of the merger, Uno will no longer be required to file periodic reports with
the Securities and Exchange Commission.
At the effective time of the merger, the directors of Newco consisting of
Aaron D. Spencer, Craig S. Miller, Paul W. MacPhail, Alan M. Fox and Robert
M. Vincent will become the directors of Uno as the surviving corporation. In
addition, the current management of Uno, consisting of Aaron D. Spencer, Craig
S. Miller, Paul W. MacPhail, Alan M. Fox, Robert M. Vincent, Mark A. Jones,
George W. Herz II and M. Heywood Whetsell, Jr., is expected, in general, to
remain the management of Uno as the surviving corporation. At the effective time
of the merger, Newco's certificate of incorporation and bylaws will become Uno's
certificate of incorporation and the bylaws.
It is expected that, following completion of the merger, the operations of
Uno will be conducted substantially as they are currently being conducted. Uno,
Parent, Newco and the Continuing Stockholders do not have any present plans or
proposals that relate to or would result in an extraordinary corporate
transaction following completion of the merger involving Uno's corporate
structure, business or management, such as a merger, reorganization,
liquidation, relocation of any operations or sale or transfer of a material
amount of assets. However, Uno, Parent, Newco, and the Continuing Stockholders
will continue to evaluate Uno's business and operations after the merger and may
develop new plans and proposals that Uno, Parent, Newco, and the Continuing
Stockholders consider to be in the best interests of Uno and its then current
stockholders.
After the completion of the merger, Parent may seek to obtain additional or
replacement financing involving debt, equity or a combination of debt and
equity. To facilitate such financing, Mr. Spencer may sell to the party or
parties providing the financing, shares of Parent that he holds immediately
after the merger. Alternatively, Mr. Spencer may sell such shares of Parent
independent of any such financing. There presently are no plans to obtain such
financing or to make any such sales. Whether such financing or sales are sought
or concluded will depend upon business needs, personal financial objectives,
market conditions and other factors which Parent and Mr. Spencer deem relevant
at the time.
67
The following table sets forth for each Continuing Stockholder his or her
interest in the net book value and net income of Uno as of April 1, 2001, based
upon the percentage of his or her beneficial ownership of Uno common stock as of
April 1, 2001:
OWNERSHIP PERCENT NET BOOK VALUE (1) NET INCOME (2)
----------------- ------------------ --------------
Aaron D. Spencer............................... 40.20% $34,229,764 $1,292,509
Uno Associates................................. 16.93 14,412,924 544,229
Mark Spencer................................... 2.41 2,050,631 77,431
Lisa Cohen..................................... 2.12 1,807,884 68,265
Craig S. Miller................................ 4.40 3,747,324 141,498
Paul W. MacPhail............................... * 9,010 340
Alan M. Fox.................................... 1.77 1,511,036 57,056
Robert M. Vincent.............................. 1.24 1,052,187 39,730
- ------------------------
* Less than one percent.
(1) Based on Uno's stockholders' equity as of April 1, 2001 (unaudited).
(2) Based on Uno's net income for the two quarters ended April 1, 2001.
The following table sets forth for each Continuing Stockholder, his or her
interest in the net book value and net income of Uno after the merger, based
upon the percentage of his or her expected beneficial ownership of capital stock
of Uno as the surviving corporation on a fully diluted basis:
OWNERSHIP PERCENT
(1) NET BOOK VALUE (1)(2) NET INCOME (1)(2)(3)
----------------- --------------------- --------------------
Aaron D. Spencer(4).................... 58.38% $49,709,791 $1,877,031
Uno Associates......................... 25.48 21,695,880 819,232
Mark Spencer(5)........................ 2.94 2,503,371 94,527
Lisa Cohen(5).......................... 2.51 2,137,123 80,701
Craig S. Miller(6)..................... 5.71 4,861,989 183,588
Paul W. MacPhail....................... -- -- --
Alan M. Fox............................ 2.85 2,426,737 91,633
Robert M. Vincent...................... 2.13 1,813,667 68,484
- ------------------------
(1) Assumes that each member of the Management Group converts all of his shares
of Uno common stock into the right to receive $9.75 per share in cash in the
merger.
(2) Based on Uno's stockholders' equity as of April 1, 2001.
(3) Based on Uno's net income for the two quarters ended April 1, 2001.
(4) Assumes that the Cheryl Spencer Memorial Foundation converts all of its
221,018 shares of Uno common stock into the right to receive $9.75 per share
in cash in the merger.
(5) Assumes that Mark Spencer and Lisa Cohen each convert 50,000 of their shares
of Uno common stock into the right to receive $9.75 per share in cash in the
merger.
(6) Assumes Mr. Miller sells to Uno as the surviving corporation options to
purchase 82,500 shares of Uno common stock.
RISKS THAT THE MERGER WILL NOT BE COMPLETED
Completion of the merger is subject to various risks, including, but not
limited to, the following:
- that the merger agreement will not be adopted and approved by the holders
of a majority of the outstanding shares of Uno common stock held by
stockholders other than the Continuing
68
Stockholders and there is no waiver of this condition by Parent, Newco,
Uno and the special committee of the board of directors;
- that Parent and Newco will not secure the financing necessary to complete
the merger on the terms and conditions set forth in the financing
proposal, as further described in "--Merger Financing";
- that the holders of more than 5% of the outstanding shares of Uno common
stock exercise their appraisal rights;
- that Uno, Parent or Newco will not have performed in all material respects
their obligations contained in the merger agreement before the effective
time of the merger;
- that the representations and warranties made by Uno, Parent or Newco in
the merger agreement will not be true and correct at the closing date of
the merger;
- that there may be new litigation that could prevent the merger, cause the
merger to be rescinded following completion of the merger or that could
have a material adverse effect on Uno;
- that there may be a material adverse change in Mr. Spencer's health; and
- that Uno will not secure required third-party consents to the merger,
including consents of liquor license authorities.
As a result of various risks to the completion of the merger, there can be
no assurance that the merger will be completed even if the requisite stockholder
approval is obtained. It is expected that, if Uno stockholders do not adopt and
approve the merger agreement or if the merger is not completed for any other
reason, the current management of Uno, under the direction of the board of
directors, will continue to manage Uno as an ongoing business. If the merger is
not completed, depending upon the circumstances, Uno may be required to
reimburse certain expenses of the Continuing Stockholders. See "Special
Factors--Estimated Fees and Expenses of the Merger."
INTERESTS OF THE CONTINUING STOCKHOLDERS IN THE MERGER
In considering the recommendation of the board of directors, Uno
stockholders should be aware that the Continuing Stockholders have interests
different from Uno stockholders generally. As a result of the conflict of
interest, the board of directors appointed the special committee, consisting of
four independent directors who are not officers or employees of Uno and who have
no financial interest in the merger different from Uno stockholders generally
(other than as holders of options to purchase shares of common stock of Uno).
The special committee was appointed to evaluate, negotiate and, if appropriate,
recommend the merger agreement and to evaluate whether the merger is in the best
interests of Uno stockholders other than the Continuing Stockholders. The
special committee was aware of these differing interests and considered them,
among other matters, in evaluating and negotiating the merger agreement and the
merger and in recommending to the board of directors that the merger agreement
and the merger be adopted and approved.
The board of directors determined that each member of the special committee
would receive $1,000 for each special committee meeting attended, regardless of
whether any proposed transaction was entered into or completed. The board of
directors also determined that Ms. Tamara P. Davis, chairman of the special
committee, would receive an additional $15,000 fee for the first 100 hours of
her time spent in connection with the performance of her responsibilities and
duties as chairman of the special committee. Thereafter, Ms. Davis will receive
$150 per hour.
69
EXECUTIVE OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
Under the terms of the merger agreement, it is expected that, in general,
the current management of Uno will remain management of Uno as the surviving
corporation. The executive officers of Uno that are expected to remain officers
of Uno following completion of the merger are Aaron D. Spencer, Craig S. Miller,
Paul W. MacPhail, Alan M. Fox, Robert M. Vincent, Mark A. Jones, George W. Herz
II, and M. Heyward Whetsell, Jr. In addition, it is expected that Mr. Spencer,
Craig S. Miller, Paul W. MacPhail, Alan M. Fox and Robert M. Vincent will each
be a director of Uno as the surviving corporation. The members of the special
committee and James F. Carlin (a former member of the special committee), all of
whom are current directors of Uno, will not serve as directors of Uno as the
surviving corporation.
MERGER CONSIDERATION TO BE RECEIVED BY THE CONTINUING STOCKHOLDERS
The members of the Management Group will be entitled to receive $9.75 per
share for each share of Uno common stock held by them upon completion of the
merger, or $428,493 in the aggregate and individually as follows: Mr. Miller,
$361,842; Mr. MacPhail, $11,349; Mr. Fox, $28,324; and Mr. Vincent, $26,978. In
addition, each of Mark Spencer and Lisa Cohen will be entitled to receive the
$9.75 per share for 50,000 shares of Uno common stock and the Cheryl Spencer
Memorial Foundation, a charitable foundation of which Mr. Spencer is the
trustee, will be entitled to receive the $9.75 per share merger consideration
for its 221,018 shares of Uno common stock. All other shares of Uno common stock
held by the Spencer Group will be contributed to Parent immediately prior to the
completion of the merger in exchange for shares of series A preferred stock of
Parent. Parent is not entitled to receive the merger consideration.
MERGER CONSIDERATION TO BE RECEIVED BY DIRECTORS AND EXECUTIVE OFFICERS OF
UNO OTHER THAN THE CONTINUING STOCKHOLDERS
The directors and executive officers of Uno other than the Continuing
Stockholders will be entitled to receive $9.75 per share of Uno common stock
held by them upon completion of the merger. As of June 4, 2001, the following
directors of Uno will be entitled to receive the following amounts in the merger
for their shares of Uno common stock:
AGGREGATE MERGER
NUMBER OF SHARES CONSIDERATION
---------------- ----------------
James F. Carlin............................... 30,050(1) $292,988
Tamara P. Davis............................... 1,000(2) $ 9,750
John T. Gerlach............................... 11,582 $112,925
Kenneth D. Hill............................... 500 $ 4,875
James J. Kerasiotes........................... -- --
- ------------------------
(1) Includes 10,050 shares beneficially owned by Mr. Carlin and 20,000 shares
held by Mr. Carlin's spouse.
(2) Includes 1,000 shares held by Ms. Davis's spouse in a revocable trust.
Ms. Davis disclaims beneficial ownership of these shares.
Messrs. Jones, Herz and Whetsell do not currently hold any shares of Uno
common stock and, therefore, will not be entitled to receive any cash in the
merger unless they exercise any options held by them prior to the completion of
the merger. See "--Stock Option Plans."
CONTINUING EQUITY INTERESTS OF THE CONTINUING STOCKHOLDERS
Immediately prior to the effective time of the merger, each share of Uno
common stock held by the Spencer Group, other than the 50,000 shares of common
stock held by each of Mark Spencer and
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Lisa Cohen and 221,018 shares of common stock held by the Cheryl Spencer
Memorial Foundation, which will be entitled to receive the merger consideration,
will be contributed to Parent in exchange for shares of series A preferred stock
of Parent.
As of June 4, 2001, Mr. Spencer and the members of the Management Group held
options to purchase the following number of shares of Uno common stock:
Mr. Spencer, 82,500 shares; Mr. Miller, 499,475 shares; Mr. Fox, 208,392 shares;
and Mr. Vincent, 155,489 shares. Mr. MacPhail does not hold any options to
purchase shares of Uno common stock.
Immediately following the completion of the merger, options to purchase
shares of common stock of Uno held by Mr. Spencer and each member of the
Management Group will be cancelled, and each will receive options to purchase an
equal number of shares of series B preferred stock of Parent. However,
Mr. Miller intends to sell to Uno as the surviving corporation options to
purchase approximately 82,500 shares of his Uno common stock and will receive
options to purchase 416,975 shares of series B preferred stock. Proceeds of this
sale will be approximately $331,900. The exercise price of the new options to
purchase series B preferred stock of Parent issued to Mr. Spencer and the
Management Group will be the same as the exercise price of their options to
purchase Uno common stock. The options to purchase the series B preferred stock
will be fully vested on the date of grant, but may not be exercised for
12 months following the date of grant and will be exercisable for a period of
20 years from the date of grant; provided, however, that no more than 50% of the
options may be exercised in any 12-month period. Upon exercise, the holder will
have the right either to acquire the shares of series B preferred stock or to
receive an amount, payable in cash or a promissory note from Parent, equal to
the difference between the value of the shares on the date of exercise and the
exercise price. The value of the shares of series B preferred stock will be
determined in accordance with a formula 5.3 times EBITDA during the 12 months
prior to the date of exercise less outstanding indebtedness.
The members of the Management Group will also purchase shares of class A
common stock of Parent for nominal consideration. If for a combination of tax
and economic reasons a member of the Management Group does not want to purchase
shares of class A common stock, he will receive options to purchase class A
common stock of Parent with the intent to provide the same economic benefits
that the member of Management Group would have received had he purchased
class A common stock.
The class A common stock will be restricted and subject to repurchase by
Parent and will vest in equal annual installments over five years subject to the
continued employment of the holder. If a member of the Management Group holding
shares of class A common stock leaves the employ of Parent or a subsidiary of
Parent, Parent will have the option, but not the obligation, for a period of six
months after termination of employment, to purchase any unvested shares of
class A common stock at the purchase price paid by the holder. In addition, for
a period of six months after termination of employment, any vested shares of
class A common stock may be purchased by Parent at a purchase price equal to the
value of such shares on the date of termination of employment determined in
accordance with a formula 5.3 times EBITDA during the 12 months prior to the
date of repurchase less outstanding indebtedness and less the aggregate
liquidation preference for the outstanding shares of preferred stock.
After the merger, Parent may issue shares of its class B common stock to
officers. In addition, Parent may, but has not yet decided to, issue options to
purchase shares of preferred stock in Parent to key employees of Uno upon the
cancellation of their options to purchase shares of Uno common stock.
Shares of the series A preferred stock and series B preferred stock of
Parent will not be convertible into common stock of Parent and will vote with
the class A common stock and class B common stock of Parent as a single class on
a share-for-share basis. The series A preferred stock, series B preferred stock,
class A common stock and class B common stock will be paid dividends only as
declared by the board of directors of Parent. If dividends are declared, the
same dividend must be
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paid on all shares of series A preferred stock, series B preferred stock,
class A common stock and class B common stock. Upon a liquidation or sale of
Parent, the series A preferred stock and the series B preferred stock will
receive, on a pro rata basis, $9.75 per share. In addition, if any excess assets
or consideration remain available for issuance after payment of $9.75 per share
to the holders of series A preferred stock and series B preferred stock, and if
no shares of class B common stock are outstanding, 75% of the excess will be
paid to the holders of series A preferred stock and the remaining 25% will be
paid to the holders of series B preferred stock and the holders of class A
common stock on a pro rata basis. If there are shares of class B common stock
outstanding, any excess assets or consideration that remain available for
issuance after payment of $9.75 per share to the holders of series A preferred
stock and series B preferred stock, 75% of the excess will be paid to the
holders of series A preferred stock and class B common stock in the following
proportion: the holders of class B common stock will receive that percentage of
the 75% equal to the percentage of the outstanding shares of series A preferred
stock, series B preferred stock, class A common stock and class B common stock
represented by the number of outstanding shares of class B common stock, and the
holders of the series A preferred stock will receive the balance of the excess;
and 25% of the excess will be paid to the holders of the series B preferred
stock, class A common stock and class B common stock in the following
proportion: the holders of the class B common stock will receive that percentage
of the 25% equal to the percentage of the outstanding shares of series A
preferred stock, series B preferred stock, class A common stock and class B
common stock represented by the number of outstanding shares of class B common
stock, and the holders of the shares of series B preferred stock and class A
common stock will receive the balance of the excess on a pro rata basis.
The ownership of series A preferred stock, series B preferred stock and
class A common stock of Parent immediately following the merger will be as
follows:
SERIES B CLASS A
SERIES A PREFERRED COMMON
NAME PREFERRED STOCK STOCK (A) STOCK (B)
- ---- --------------- ------------ -----------
Aaron D. Spencer 4,184,582 82,500 --
Uno Associates 1,861,977 -- --
Mark Spencer 214,917 -- --
Lisa Cohen 183,557 -- --
Craig S. Miller -- 416,975 300,000
Paul W. MacPhail -- -- 300,000
Alan M. Fox -- 208,392 200,000
Robert M. Vincent -- 155,489 200,000
- ------------------------
(a) Options to purchase shares of series B preferred stock.
(b) Consisting of shares of class A common stock or options to purchase shares
of class A common stock.
The Continuing Stockholders will enter into agreements prior to the merger
that will provide that so long as Parent or Uno, as the surviving corporation,
remain private companies, shares of preferred stock and common stock will be
subject to a right of first refusal first by Parent and then by Mr. Spencer.
Mr. Spencer also will have a right to require any third party purchaser of
shares of capital stock held by the Continuing Stockholders also to purchase the
same percentage of Mr. Spencer's shares that the third party proposes to
purchase from any of the other Continuing Stockholders. If Mr. Spencer sells his
controlling interest in Parent, all of the other Continuing Stockholders must
also sell their shares of capital stock of Parent on the same terms and
conditions. Each member of the Management Group will also sign a non-competition
agreement on terms to be negotiated.
After the completion of the merger, the stockholders of Parent may elect to
sell their shares of Parent to a third party or otherwise engage in a merger or
sale of Uno or Parent. No Continuing Stockholder has any agreement with a third
party to take any of these actions.
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VOTING AGREEMENT
The Continuing Stockholders have agreed to vote all of their shares of Uno
common stock in favor of the adoption and approval of the merger agreement. The
Continuing Stockholders are not required to vote for the merger agreement if
either the board of directors or the special committee withdraws its
recommendation of the merger or if the merger agreement is terminated. The
Continuing Stockholders hold 7,071,158 shares of common stock or approximately
64% of the total number of issued and outstanding shares of Uno common stock.
STOCK OPTION PLANS
The executive officers of Uno, key employees of Uno and non-employee
directors of Uno, are eligible to participate in one or more of Uno's current
stock option plans. The purpose of the stock option plans is to provide
increased incentives to participants, to encourage new employees and
non-employee directors to become affiliated with Uno and to align the interests
of such persons with those of the stockholders of Uno. The stock option plans
are administered by the compensation committee of the board of directors. The
compensation committee has the authority to determine the employees to whom the
stock options are awarded, the terms upon which option grants shall be made and
the number of shares subject to each option, all subject to the terms and
conditions of the stock option plans. The stock option plans for non-employee
directors do not provide the compensation committee with any discretion as to
the number and terms of stock options or to whom and when they are granted.
The directors and executive officers of Uno other than those directors or
executive officers who are Continuing Stockholders held the following number of
options to purchase shares of Uno common stock as of June 4, 2001:
NUMBER OF
DIRECTORS OPTIONS
James F. Carlin............................................. 18,735
Tamara P. Davis............................................. 9,419
John T. Gerlach............................................. 208,392
Kenneth D. Hill............................................. 9,419
James J. Kerasiotes......................................... 9,419
EXECUTIVE OFFICERS
Mark A. Jones............................................... 11,000
George W. Herz II........................................... 21,000
M. Heyward Whetsell, Jr..................................... 10,000
Upon completion of the merger, the holders of options to purchase shares of
Uno common stock, other than Mr. Spencer and the Management Group, will continue
to have the right to purchase shares of common stock of Uno as the surviving
corporation. As a result of the merger, the options continue as options to
purchase shares of common stock of Uno as the surviving corporation. After the
merger, Uno as the surviving corporation may, but has not yet decided to, offer
to repurchase and cancel outstanding options of Uno as the surviving
corporation. If it does, Mr. Miller intends to sell to Uno as the surviving
corporation options to purchase approximately 82,500 shares of his Uno common
stock. See "The Merger Agreement--Treatment of Stock Options."
CHANGE IN CONTROL PROTECTION AGREEMENTS
The compensation committee of the board of directors of Uno determined and
the board of directors of Uno affirmed that it is in the best interests of Uno's
stockholders, employees and customers to assure continuity of management of
Uno's administration and operations in the event of a change in control.
Therefore, Uno has entered into change in control protection agreements with
each of its officers that provide, in general, for specified severance payments
in the event that an officer of Uno is terminated, other than for cause, within
two years of a change in control.
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A change in control will be deemed to have occurred, among other reasons,
if:
- the beneficial ownership interest of Aaron D. Spencer is reduced to less
than 15% of the outstanding shares of Uno common stock;
- another "person" becomes the beneficial owner of 35% or more of Uno common
stock;
- a majority of the board of directors of Uno is replaced within a period of
two years; or
- there is a sale of all, or substantially all, of Uno's assets.
The change in control protection agreements provide for severance payments
that are, in general, the equivalent of salary and benefits for periods ranging
from between 12 and 24 months. Pursuant to their change in control protection
agreements, Mr. Spencer and Mr. Miller would be entitled to severance payments
equal to 24 months of salary and benefits, and Mr. MacPhail, Mr. Fox and
Mr. Vincent would be entitled to severance payments equal to 18 months of salary
and benefits.
It is anticipated that Parent will replace the change in control protection
agreements following the merger with new agreements for Mr. Spencer and the
officers.
TRANSACTIONS WITH AFFILIATES
LEASES. Uno's executive offices are located in two adjacent buildings in
West Roxbury, Massachusetts. The first, a three-story building owned by Charles
Park Road, LLC, a Massachusetts limited liability company owned by Aaron D.
Spencer, Mark Spencer and Lisa Cohen, is leased to Uno pursuant to a 10-year
lease, commencing on March 30, 1987, with an option to renew for an additional
five-year term. Currently, Uno is in the five-year option term. Uno's rent is
$43,200 per year, and Uno is responsible for all taxes, utilities, insurance,
maintenance and repairs. Uno also leases the adjacent facility, a two-story
building owned by Charles Park Road, LLC, pursuant to a 15-year lease commencing
on February 1, 1990, with options to renew for three additional five-year
periods. Rent during the initial five-year period of the lease was $106,800 per
year, increasing to $128,160 per year for the next five years, and to $153,792
per year for the final five years of the initial term of the lease. Uno is
responsible for all taxes, utilities, insurance, maintenance and repairs. Rent
during any option term will be 120% of the rent for the prior term of the lease.
Uno believes that the terms of the leases for the two offices are as favorable
as otherwise available in the real estate market.
One Uno-owned restaurant in Boston, Massachusetts is located on the first
floor of a six-story office building owned by Mr. Spencer. Mr. Spencer leases
the entire building to Uno pursuant to a 15-year lease, commencing on March 29,
1997 and ending on March 29, 2012, at a rent of $162,000 per year for the first
five years, $186,300 per year for the second five years and $214,245 per year
for the last five years. The lease has two five-year renewal options with rent
of $246,382 per year for the first renewal period and $283,339 per year for the
second renewal period. Uno is responsible for all taxes, utilities, insurance,
maintenance and repairs. The lease calls for Uno to pay the first $50,000 per
year in capital improvements for the first five years of the lease, and the
first $25,000 per year in capital improvements for the remaining 10 years of the
initial lease. Capital improvements above this level are to be paid by
Mr. Spencer. The lease provides that if Uno or Mr. Spencer were to terminate the
lease, a new lease between Uno and Mr. Spencer relating only to the restaurant
space of the building would become effective immediately. Uno currently sublets
all but the restaurant space at rents that aggregate more than the $162,000
annual rent that Uno is currently obligated to pay Mr. Spencer. Uno believes
that the terms of its occupancy are as favorable as those otherwise available in
the real estate market.
Uno and Mr. Spencer are currently negotiating a sale and leaseback
transaction pursuant to which Uno plans to sell a portfolio of properties to
Mr. Spencer for an aggregate consideration of approximately $12,000,000.
Mr. Spencer will then lease these properties back to Uno for an aggregate annual
rental payment of approximately $1,400,000. For a more detailed description of
this transaction, see "--Merger Financing."
OTHER MATTERS. A corporation, wholly owned by Craig S. Miller, president
and chief executive officer of Uno, and his brother, owns two franchised
Pizzeria Uno restaurants in San Diego, California
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and one franchised unit in Chula Vista, California, all of which operate under
Uno's standard unit franchise agreements. The restaurants are being operated by
Mr. Miller's brother and Mr. Miller is not involved in the daily operations of
the restaurants. The board of directors has determined that the franchise
agreements are as favorable as otherwise available from nonaffiliated
franchisees.
On January 23, 1996, Uno loaned Mr. Miller the principal sum of $150,000
pursuant to a promissory note. The note bears interest at the rate of 7.3% per
year payable in arrears on a quarterly basis commencing March 31, 1996. On
September 27, 1998, Mr. Miller paid $75,000 in principal and on September 3,
1999, Mr. Miller paid an additional $20,000 in principal. The maturity date for
the balance of the $55,000 in principal has been extended to September 30, 2001.
The note is secured by all of Mr. Miller's real and personal property.
On August 16, 1999, Uno loaned Mr. Spencer $385,050 to pay the $8.55 per
share exercise price of options to purchase 41,250 shares of Uno's common stock
together with the related withholding taxes. The loan was evidenced by a
promissory note dated August 26, 1999 which bore interest at a rate of 6.68% per
year. Mr. Spencer repaid the loan in full on March 8, 2000.
To Uno's knowledge, after reasonable inquiry, all of the directors and
executive officers of Uno who own shares of common stock of Uno currently intend
to vote their shares "FOR" the proposal to adopt and approve the merger
agreement.
INDEMNIFICATION
The Eighth Section of Uno's restated certificate of incorporation, as
amended, eliminates the personal liability of Uno's directors to Uno or its
stockholders for monetary damages for breaches of their fiduciary duty (subject
to certain exceptions, such as breaches of the duty of loyalty to Uno or its
stockholders), and provides that Uno may indemnify its officers and directors to
the full extent permitted by law.
Article VII of Uno's amended and restated bylaws includes provisions for
indemnification of Uno's officers and directors to the extent permitted by the
General Corporation Law of the State of Delaware. Section 145 of the General
Corporation Law of the State of Delaware authorizes a corporation to indemnify
its directors, officers, employees or agents in non-derivative suits if such
party acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, as determined in accordance with the Delaware General Corporation
Law. Section 145 further provides that indemnification shall be provided if the
party in question is successful on the merits or otherwise.
Uno has entered into indemnification agreements with each of its directors
and with the following executive officers who are not also directors: Alan
M. Fox, Robert M. Vincent, Mark A. Jones, George W. Herz, II and M. Heyward
Whetsell, Jr. Generally, the indemnification agreements attempt to provide the
maximum protection permitted by Delaware law for indemnification of directors
and officers. The indemnification agreements provide that Uno will pay, to the
fullest extent permitted by law, certain amounts incurred by a director or
officer in connection with any civil, criminal, administrative, investigative or
other action or proceeding where the individuals' involvement is by reason of
the fact that he is or was a director or officer. Such amounts include, to the
maximum extent permitted by law, attorney's fees, judgments, civil or criminal
fines, penalties, settlement amounts and other expenses incurred in connection
with legal proceedings. Uno also provides directors' and officers' liability
insurance for all directors and officers.
The merger agreement provides that Uno as the surviving corporation will,
for six years after the effective time of the merger, continue to honor all
indemnification obligations in force as of the date of the merger agreement and
will not amend, repeal or otherwise modify those obligations in a way that would
adversely affect the rights of the individuals who are covered by the
indemnification obligations. In addition, following the completion of the
merger, Uno as the surviving corporation is required to
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indemnify, defend, and hold harmless all current and former officers, directors
and employees of Uno and its subsidiaries from all liabilities, costs, expenses
and claims arising out of actions taken before the effective time of the merger
in performance of their duties as directors or officers of Uno or any
subsidiaries in connection with the transactions contemplated by the merger
agreement. In addition, Uno as the surviving corporation is required to maintain
its directors and officers' liability insurance policies in effect for six years
after the effective time of the merger, except that Parent or Uno as the
surviving corporation will not be required to pay insurance premiums in excess
of 300% of the premiums it currently pays. Parent has agreed to cause Uno as the
surviving corporation to comply with the obligations described in this paragraph
and Parent has agreed to guaranty the obligations of Uno as the surviving
corporation.
CERTAIN RISKS IN THE EVENT OF BANKRUPTCY
If Uno is insolvent at the effective time of the merger or becomes insolvent
as a result of the merger, the transfer of funds representing the $9.75 per
share price payable to stockholders upon completion of the merger may be deemed
to be a "fraudulent conveyance" under applicable law, and therefore may be
subject to claims of creditors of Uno. If such a claim is asserted by the
creditors of Uno after the merger, there is a risk that persons who were
stockholders at the effective time of the merger will be ordered by a court to
return to Uno's trustee in bankruptcy all or a portion of the $9.75 per share in
cash they received upon the completion of the merger.
Based upon the projected capitalization of Uno at the time of the merger and
projected results of operations and cash flow after the merger, management of
Uno has no reason to believe that Uno and its subsidiaries, on a consolidated
basis, will be insolvent immediately after giving effect to the merger.
MERGER FINANCING
GENERALLY. It is estimated that approximately $47 million will be required
to complete the merger and pay related fees and expenses. See "--Estimated Fees
and Expenses of the Merger." This sum will be provided by a combination of
$75 million in senior secured debt financing and two sale-leaseback transactions
providing gross proceeds of approximately $37 million. The proceeds from the
sale and leaseback transactions will be used to reduce Uno's outstanding
indebtedness under its existing $55 million credit facility. The new
$75 million senior credit facility will replace the existing $55 million credit
facility upon completion of the merger and will provide the financing for the
merger. In one of the sale-leaseback transactions, which was completed on
May 11, 2001, Uno sold and leased back from U.S. Realty Advisors, LLC a
portfolio of 12 Pizzeria Uno Chicago Bar & Grill restaurants located in 10
states. In the other sale-leaseback transaction, Uno will sell to and leaseback
from Aaron D. Spencer a portfolio of six restaurants and two non-restaurant
properties located in four states. Uno, Parent and Newco have received a
commitment letter from Fleet National Bank and SunTrust Bank to provide the debt
financing. Uno and Mr. Spencer have not signed a term sheet, letter of intent or
commitment letter for the proposed sale and leaseback with Mr. Spencer of the
portfolio of Pizzeria Uno Chicago Bar & Grill restaurants and non-restaurant
properties. Upon completion of the sale and leaseback transaction with
Mr. Spencer, Uno will not have any remaining unencumbered owned real estate
available for future financing.
If the merger is completed, Uno as the surviving corporation, expects to
repay the debt incurred in connection with the merger primarily through cash
flow generated from operations in the ordinary course of business and/or through
refinancing. No alternative financing arrangements or alternative financing
plans have been made in the event that these financing arrangements are not
completed.
The documentation governing the senior secured debt financing and the sale
and leaseback transactions with Mr. Spencer has not yet been finalized and,
accordingly, remains subject to change.
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DEBT FINANCING
The commitment letter for the debt financing from Fleet National Bank and
SunTrust Bank provides for a senior credit facility consisting of a $20 million
revolving credit facility, a Term A loan of $40 million and a Term B loan of
$15 million. Only a portion of the proceeds from the senior credit facility will
be used to finance the merger. The remaining proceeds under the senior credit
facility will be used to refinance existing indebtedness of Uno to Fleet
National Bank and SunTrust Bank in the amount of $27,000,000 as of June 1, 2001,
for working capital and other general corporate purposes. The lenders will be
Fleet National Bank and SunTrust Bank and they intend to syndicate the senior
credit facility to other financial institutions.
The credit facility documentation is expected to contain customary
representations and warranties by Parent and Uno, including representations and
warranties relating to organization, authority, enforceability, financial
statements, compliance with law and other instruments, absence of material
adverse changes, absence of material litigation, absence of defaults, absence of
conflicts with material agreements, payment of taxes and certain business
specific matters.
The credit facility documentation also is expected to contain numerous
restrictive covenants, including usual and customary financial covenants and
covenants related to capital expenditures, mergers and asset sales or purchases,
incurrence of debt obligations, liens and contingent obligations, transactions
with affiliates, distributions and dividends and use of proceeds.
The credit facility documentation also is expected to contain standard
events of default, including, among other events, defaults based on failure to
pay interest, principal or other amounts when due, failure to comply with
covenants, inaccurate or false representations or warranties, cross defaults,
change of control, judgment defaults, ERISA, bankruptcy and insolvency.
The following is a summary of the material conditions which must be
satisfied for Fleet National Bank and SunTrust Bank and their syndication of
other financial institutions to fund the amount contemplated by the commitment
letter:
- satisfactory completion by the lenders of their due diligence;
- satisfactory completion of loan and security documentation;
- satisfactory indemnification and environmental reports on any owned real
estate;
- satisfactory corporate and capital structure of Uno immediately following
the going private transaction, including a minimum equity capital
contribution by the Continuing Stockholders, the completion of the sale
and leaseback transactions, and a maximum of $12,250,000 borrowed under
the revolving line of credit on the first day of use;
- completion of the merger of Newco into Uno in accordance with the terms of
the merger agreement;
- the absence of any litigation or other proceeding which could impair the
completion of the transactions contemplated by the senior credit facility,
such transactions include the payment of the merger consideration, and the
refinancing of existing indebtedness of Uno to Fleet National Bank and
SunTrust Bank;
- a leverage ratio not exceeding 2.37X after giving effect to the borrowings
on the closing date;
- the last four quarters earnings before interest, taxes, depreciation and
amortization not being less than $30 million;
- the absence of any material adverse change in the assets or business of
Uno as represented in Uno's Annual Report on Form 10-K for the fiscal year
ended October 1, 2000 and any other subsequent filings with the Securities
and Exchange Commission;
- the absence of any material adverse changes in governmental regulation or
policy affecting the lenders or Uno;
77
- the absence of any material changes or disruptions in the syndication,
financial or capital markets that could materially impair the syndication
of the senior credit facility prior to the closing;
- satisfactory 6-year projections prepared by Uno management based upon
reasonable assumptions and no material misstatements in or material
omissions from materials previously delivered to the banks;
- repayment of Uno's existing debt with the proceeds of the senior credit
facility, except for certain capital lease obligations and other mortgage
debt;
- all filings and other actions required to create and perfect a first
priority security interest in the collateral of Uno and its subsidiaries
and such collateral being free and clear of all other liens (subject to
certain exceptions);
- receipt by the lenders of a certificate of an officer of Uno as to Uno's
solvency on a consolidated basis after the merger;
- the lenders' receipt of satisfactory evidence of compliance with all
applicable laws, applicable third party consents, corporate approvals and
customary legal opinions, and
- Uno shall have paid the fees and reasonable expenses payable in connection
with the senior credit facilities.
The lenders are aware of the litigation filed by Bruce Cox, as described
under the heading "Special Factors--Litigation Challenging the Merger." Although
it is not expected that the litigation filed by Bruce Cox will result in a
failure to satisfy the condition to closing that there be an absence of any
litigation which could impair the completion of the transactions contemplated by
the senior credit facilities, if there is a material change in the litigation it
is possible that the lenders may not complete the financing.
Borrowings under the credit facility will be secured by a perfected first
priority security interest in all the assets of Parent and Uno other than
certain personal property located in the restaurants subject to the sale and
leaseback transactions with U.S. Realty Advisors, LLC. The assets include, but
are not limited to, accounts and notes receivable, intercompany loans, franchise
agreements, inventory, equipment, owned real property, all licenses, capital
stock of Uno's subsidiaries and intangible assets (including patents, trademarks
and copyrights), subject to exceptions to be agreed upon. The collateral also
will be secured by a pledge of and security interest in 100% of the outstanding
capital stock of Uno and each of its subsidiaries. The credit facility will be
guaranteed by the Parent and all existing or subsequently acquired or organized
direct and indirect subsidiaries of Uno.
Interest on the revolving credit facility and the Term A loan and the Term B
loan will be calculated initially as a function of Fleet's base rate or the
eurodollar rate plus, in each case, an applicable margin. The base rate is
defined as the higher of the base rate announced by Fleet National Bank from
time to time or the federal funds rate plus 1/2%. The applicable margin for the
base rate is 2.00% and for the eurodollar rate is 3.50% for the revolving line
and for the Term A loan. The applicable margin for the base rate is 2.50% and
the eurodollar rate is 4.00% for the Term B loan. The interest rate is subject
to reduction based on the leverage of Uno as the surviving corporation at
various times.
The revolving credit under the credit facility terminates five years after
the closing of the senior credit facility. Uno will be required to repay the
Term A loan in quarterly installments commencing on the last day of the sixth
month following the closing date of the senior credit facility and until five
years after the closing of the senior credit facility. Uno will be required to
repay the Term B loan in quarterly installments commencing on the last day of
the sixth month following the closing date of the senior credit facility and
until six years after the closing of the senior credit facility. The repayment
of the Term A and Term B loans is to be made in accordance with an amortization
of payments to be set
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forth in the definitive documentation. Advances under the revolving credit
facility may be borrowed, repaid and reborrowed until maturity on the fifth
anniversary of the closing of the senior credit facility.
Uno has agreed with Parent to share the fees and expenses payable to Fleet
National Bank and SunTrust for the credit facility. Uno will pay two-thirds and
Parent will pay one-third of these fees and expenses, including indemnification
obligations. Aaron D. Spencer has paid the fees required to be paid by Parent to
date and has guaranteed the obligations of Parent to pay its one-third of the
fees, expenses and indemnification and the obligations of Parent and Newco under
the merger agreement pursuant to a limited recourse guaranty. Uno has recourse
under Mr. Spencer' guaranty only to a maximum of 500,000 shares of
Mr. Spencer's Uno common stock and not to Mr. Spencer personally.
SALE AND LEASEBACK OF PORTFOLIO RESTAURANTS TO U.S. REALTY ADVISORS
In May 2000, Uno completed the sale and leaseback of a portfolio of 12
Pizzeria Uno Chicago Bar & Grill restaurant properties located in 10 states
provides for approximately $25.0 million of gross proceeds. U.S. Realty
Advisors, LLC, the purchaser of the properties, obtained mortgage financing from
FFCA Funding Corporation. FFCA Funding Corporation was granted a first mortgage
on the properties.
The leaseback to Uno from U.S. Realty Advisors, LLC is pursuant to a long
term master lease. The master lease is an unconditional, bond-type, triple net
lease with a term of 20 years and four five-year renewal terms at Uno's option.
The sale and leaseback documentation contains customary representations and
warranties, financial covenants and indemnities by Uno.
The aggregate annual rent for the properties is payable in equal monthly
installments in advance. There are three options for rent payments. The annual
base rent is approximately $2.7 million.
SALE AND LEASEBACK OF PROPERTIES TO AARON D. SPENCER
The sale and leaseback transaction with Mr. Spencer is expected to be on
terms substantially similar to those contained in the agreements between Uno and
U.S. Realty Advisors, LLC. The transactions with Mr. Spencer are expected to
take place in two phases. The first phase relates to the sale of two restaurants
and two non-restaurant properties. The second phase is expected to relate to
four additional Pizzeria Uno Chicago Bar & Grill restaurant properties.
The sale of the properties in the first phase is expected to provide Uno
with approximately $7.5 million of gross proceeds. The valuation and sale price
of the properties in the first phase was based on Uno's book value for the
properties. Uno obtained one independent appraisal for each of the
non-restaurant properties and two appraisals for each of the restaurant
properties. The aggregate average of the two appraisals for both restaurant
properties is $3.3 million and the aggregate appraisals for the two
non-restaurant properties is $3 million. The aggregate book value valuation and
sale price for all of the properties exceeds the sum of the appraised values of
the non-restaurant properties and the average of the appraised values for each
of the restaurant properties.
The sale of the properties in the second phase is expected to provide Uno
with approximately $4.6 million of gross proceeds. Uno did not obtain
independent appraisals for any of the properties in the second phase because the
fair market value of these properties was readily ascertainable by other
appropriate methods including the following: Of the four restaurant properties
in the second phase, one property is currently leased by Uno to a third party.
The lease gives the tenant an option to purchase the property at a stated value.
Uno will sell the property in the sale and leaseback transaction with
Mr. Spencer at that valuation. Uno purchased the second property in
October 2000. It will sell this property at the same price in the sale and
leaseback with Mr. Spencer. The remaining two properties which are subject to
Mr. Spencer's sale and leaseback transaction will be valued at Uno's book value.
Uno first intended to include these properties in the sale and leaseback
transaction with U.S. Realty Advisors, LLC, but U.S. Realty Advisors, LLC
declined to purchase them at book value. Consequently,
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Uno believes that the book value price which Mr. Spencer will pay in the sale
and leaseback is at least as favorable a price as Uno could obtain from an
independent third party.
Mr. Spencer expects to obtain mortgage financing from General Electric
Capital Business Asset Funding Corporation on the properties purchased from Uno.
General Electric Capital Business Asset Funding Corporation will be granted a
first mortgage on the properties.
The leaseback to Uno from Mr. Spencer will be pursuant to a long term master
lease. The master lease is expected to be an unconditional, bond-type, triple
net lease with a term of 20 years and four five-year renewal terms at the
tenant's option. The sale and leaseback documentation is expected to contain
customary representations and warranties, financial covenants and indemnities by
Uno.
Mr. Spencer's commitment to complete the sale and leaseback is subject to
the satisfaction of customary conditions and covenants, including customary due
diligence. The following is a summary of the material conditions to be satisfied
in order for Mr. Spencer to fund the amount contemplated by the commitment
letter:
- the approval and acceptance by Mr. Spencer and General Electric Capital
Business Asset Funding Corporation of each of the properties, including a
satisfactory review of property-level economics;
- the review and approval by Mr. Spencer and General Electric Capital
Business Asset Funding Corporation of title and surveys for the
properties, the master lease, site inspection reports and other customary
items of due diligence and no material adverse change with respect to each
of the properties between the date of such approval and closing of the
financing;
- mutual acceptance of transaction documents, perfection of liens on the
land, buildings and improvements (including real estate and trade
fixtures) and satisfaction of customary closing conditions and due
diligence in form and substance satisfactory to all parties and their
respective legal counsel;
- no material adverse change of Uno's financial condition between the date
of the commitment and closing of the financing; and
- closing of the mortgage financing provided by General Electric Capital
Business Asset Funding Corporation.
The closing of the transactions contemplated by the first phase is expected
to occur in June 2001. The closing of the transactions contemplated by the
second phase is expected to occur simultaneously with, and is conditioned upon,
the completion of the merger.
The aggregate annual rent for the properties will be payable in equal
monthly installments in advance. The base rent for the properties leased in the
first phase is expected to be approximately $857,000 per year and the base rent
for the properties leased in the second phase is expected to be approximately
$532,000.
ESTIMATED FEES AND EXPENSES OF THE MERGER
Whether or not the merger is completed, in general, all fees and expenses
incurred in connection with the merger will be paid by the party incurring those
fees and expenses. Prior to the signing of the merger agreement, Uno agreed to
reimburse $100,000 of the expenses of the Continuing Stockholders incurred prior
to March 1, 2001 in connection with their going private proposal.
In the event the merger agreement is terminated for one of the reasons
described below, Uno will be required to reimburse Parent and Newco for one of
the following amounts depending on the reason why the merger agreement is
terminated. First, if the reason for the termination of the merger agreement is
not within the reasonable control of the stockholders of Parent, Uno must
reimburse Parent for up to an additional $500,000 of Parent's and Newco's
reasonable expenses. Second, Uno will reimburse up to $1,500,000 of Parent's and
Newco's expenses if the merger agreement is terminated by
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Uno because (1) the special committee or the board of directors fails to
recommend approval of the merger agreement or modifies its recommendation in a
manner adverse to Parent or Newco, (2) a claim or suit is threatened or
instituted which could prevent or rescind the merger or have a material adverse
effect on Uno or Parent, or (3) the special committee discusses a proposed
acquisition by a third party to acquire more than 10% and less than 50% of the
outstanding common stock of Uno, the third party acquires shares of Uno's common
stock and the merger agreement is not approved by the holders of a majority of
the shares of common stock held by stockholders other than the Continuing
Stockholders at the special meeting. Finally, in the event that the merger
agreement is terminated by Uno because the special committee accepts a superior
proposal, Uno will pay Parent a termination fee of $1,500,000 and will reimburse
up to $1,500,000 of Parent's and Newco's expenses.
Uno has agreed with Parent to share the fees and expenses payable to Fleet
National Bank and SunTrust for the credit facility. Uno will pay two-thirds and
Parent will pay one-third of these fees and expenses, including indemnification
obligations. Aaron D. Spencer has paid the fees required to be paid by Parent to
date and has guaranteed the obligations of Parent to pay its one-third of the
fees, expenses and indemnification and the obligations of Parent and Newco under
the merger agreement pursuant to a limited recourse guaranty. Uno has recourse
under Mr. Spencer's guaranty only to a maximum of 500,000 shares of
Mr. Spencer's Uno common stock and not to Mr. Spencer personally. Mr. Spencer
may, in his discretion, satisfy his obligations under the guaranty in cash or by
delivering shares of Uno common stock, which will be deemed to have a value of
$9.75 per share.
Fees and expenses of the merger are estimated to be as follows:
DESCRIPTION AMOUNT
- ----------- ----------
Filing Fees (SEC)........................................... $ 8,869
Debt financing fees and expenses............................ $2,000,000
Adams, Harkness & Hill transaction fee...................... $ 285,000(1)
Tucker Anthony transaction fee.............................. $ 100,000(2)
Legal, accounting and financial advisors' fees and
expenses.................................................. $ 500,000
Accounting fees and expenses................................ $ 100,000
Printing and mailing costs.................................. $ 100,000
Miscellaneous............................................... $ 250,000
----------
Total....................................................... $3,243,869
- ------------------------
(1) These fees and expenses have been paid to Adams, Harkness & Hill and are not
contingent upon completion of the merger.
(2) Of the fees and expenses of Tucker Anthony, $25,000 has been paid by the
Continuing Stockholders and the remaining $75,000 will be paid upon
completion of the merger.
These expenses will not reduce the merger consideration to be received by
Uno stockholders.
FEDERAL INCOME TAX CONSEQUENCES
Upon completion of the merger, each outstanding share of Uno common stock
(other than shares held by Parent and other than shares as to which appraisal
rights are properly exercised) will be converted into the right to receive the
$9.75 in cash, without interest.
The following discussion is a summary of the principal United States federal
income tax consequences of the merger to stockholders whose shares are
surrendered pursuant to the merger (including any cash amounts received by
dissenting stockholders pursuant to the exercise of appraisal rights). The
discussion applies only to stockholders in whose hands shares of Uno common
stock are capital assets, and may not apply to shares of Uno common stock
received pursuant to the exercise of employee stock options or otherwise as
compensation, or to stockholders who are not citizens or residents of the United
States.
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The United States federal income tax consequences set forth below are based
upon present law. Because individual circumstances may differ, each stockholder
is urged to consult his or her own tax advisor to determine the applicability of
the rules discussed below to him or her and the particular tax effects of the
merger, including the application and effect of state, local and other tax laws.
The receipt of cash pursuant to the merger (including any cash amounts
received by dissenting stockholders pursuant to the exercise of appraisal
rights) will be a taxable transaction for federal income tax purposes under the
Internal Revenue Code of 1986, as amended, and also may be a taxable transaction
under applicable state, local and other income tax laws. In general, for federal
income tax purposes, a stockholder will recognize gain or loss equal to the
difference between the cash received by the stockholder pursuant to the merger
and the stockholder's adjusted tax basis in the shares of Uno common stock
surrendered in the merger. Such gain or loss will be capital gain or loss and
will be long term gain or loss if, on the effective date of the merger, the
shares of Uno common stock were held for more than one year. There are
limitations on the deductibility of capital losses.
Payments in connection with the merger may be subject to "backup
withholding" at a 31% rate. Backup withholding generally applies if the
stockholder fails to furnish such stockholder's social security number or other
taxpayer identification number, or furnishes an incorrect taxpayer
identification number. Backup withholding is not an additional tax but merely an
advance payment, which may be refunded to the extent it results in an
overpayment of tax. Certain persons generally are exempt from backup
withholding, including corporations and financial institutions. Certain
penalties apply for failure to furnish correct information and for failure to
include the reportable payments in income. Stockholders should consult with
their own tax advisors as to the qualifications for exemption from withholding
and procedures for obtaining such exemption.
Neither Parent nor Newco will recognize gain or loss for United States
federal tax purposes as a result of the merger. Mr. Spencer, Uno Associates,
Lisa Cohen and Mark Cohen will not recognize gain or loss for federal income tax
purposes as a result of their exchange of Uno common stock for Parent capital
stock. The aggregate tax basis of the Parent capital stock received in exchange
for Uno common stock will be the same as the aggregate tax basis of the Uno
common stock surrendered in the exchange. The holding period of Parent capital
stock received as a result of the exchange will include the holding period of
the Uno common stock surrendered.
ANTICIPATED ACCOUNTING TREATMENT OF MERGER
The merger is essentially the combination of two companies under common
control. Under generally accepted accounting principles, the combination of
entities under common control is accounted for like a pooling of interests;
accordingly there will be no change in the accounting basis of the assets and
liabilities.
CERTAIN REGULATORY MATTERS
Uno, Parent, Newco and the Continuing Stockholders do not believe that any
governmental filings are required with respect to the merger other than (i) the
filing of the certificate of merger with the Secretary of State of the State of
Delaware, (ii) filings with the Securities and Exchange Commission and the New
York Stock Exchange, (iii) approval from certain liquor licensing authorities
and (iv) filings relating to franchises. Uno, Parent, Newco and the Continuing
Stockholders do not believe that they are required to make a filing with the
Department of Justice and the Federal Trade Commission pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, although each
agency has the authority to challenge the merger on antitrust grounds before or
after the merger is completed.
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APPRAISAL RIGHTS
Under Section 262 of the Delaware General Corporation Law, referred to as
the "DGCL," any holder of common stock who does not wish to accept $9.75 per
share in cash for the holder's shares of common stock may exercise appraisal
rights under the DGCL and elect to have the fair value of the holder's shares of
common stock on the date of the merger (exclusive of any element of value
arising from the accomplishment or expectation of the merger) judicially
determined and paid to the holder in cash, together with a fair rate of
interest, if any, provided that the holder complies with the provisions of
Section 262 of the DGCL.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL, and is qualified in its entirety by the full
text of Section 262, which is provided in its entirety as Exhibit B to this
proxy statement. All references in Section 262 and in this summary to a
"stockholder" are to the record holder of the shares of common stock as to which
appraisal rights are asserted. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES
OF COMMON STOCK HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER
OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW THE STEPS
SUMMARIZED BELOW PROPERLY AND IN A TIMELY MANNER TO PERFECT APPRAISAL RIGHTS.
Under Section 262, where a proposed merger is to be submitted for adoption
and approval at a meeting of stockholders, as in the case of the special
meeting, the corporation, not less than 20 days before the meeting, must notify
each of its stockholders entitled to appraisal rights that appraisal rights are
available and include in that notice a copy of Section 262. This proxy statement
constitutes that notice to the holders of common stock, and the applicable
statutory provisions of the DGCL are attached to this proxy statement as
Exhibit B. Any stockholder who wishes to exercise appraisal rights or who wishes
to preserve that right should review carefully the following discussion and
Exhibit B to this proxy statement. Moreover, because of the complexity of the
procedures for exercising the right to seek appraisal of the common stock, Uno
believes that stockholders who consider exercising such appraisal rights should
seek the advice of counsel, which counsel or other appraisal services will not
be paid for by Uno. FAILURE TO COMPLY WITH THE PROCEDURES SPECIFIED IN
SECTION 262 TIMELY AND PROPERLY WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS.
FILING WRITTEN OBJECTION. Any holder of common stock wishing to exercise
the right to demand appraisal under Section 262 of the DGCL must satisfy each of
the following conditions:
- as more fully described below, the holder must deliver to Uno a written
demand for appraisal of the holder's shares before the vote on the merger
agreement at the special meeting, which demand must reasonably inform Uno
of the identity of the holder and that the holder intends to demand the
appraisal of the holder's shares;
- the holder must not vote the holder's shares of common stock in favor of
the merger agreement at the special meeting or consent thereto in writing
pursuant to Section 228 of the DGCL; and
- the holder must continuously hold the shares from the date of making the
demand through the effective time of the merger; a stockholder who is the
record holder of shares of common stock on the date the written demand for
appraisal is made, but who thereafter transfers those shares before the
effective time of the merger, will lose any right to appraisal in respect
of those shares.
The written demand for appraisal must be in addition to and separate from
any proxy or vote. Neither voting (in person or by proxy) against, abstaining
from voting or failing to vote on the merger agreement and the merger will
constitute a written demand for appraisal within the meaning of Section 262.
Only a holder of record of shares of common stock issued and outstanding
immediately before the effective time of the merger is entitled to assert
appraisal rights for the shares of common stock
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registered in that holder's name. A demand for appraisal should be executed by
or on behalf of the stockholder of record, fully and correctly, as the
stockholder's name appears on the applicable stock certificates, should specify
the stockholder's name and mailing address, the number of shares of common stock
owned and that the stockholder intends to demand appraisal of the stockholder's
common stock. If the shares are owned of record in a fiduciary capacity, such as
by a trustee, guardian or custodian, execution of the demand should be made in
that capacity. If the shares are owned of record by more than one person, as in
a joint tenancy or tenancy in common, the demand should be executed by or on
behalf of all owners. An authorized agent, including one or more joint owners,
may execute a demand for appraisal on behalf of a stockholder; however, the
agent must identify the record owner or owners and expressly disclose the fact
that, in executing the demand, the agent is acting as agent for such owner or
owners. A record holder such as a broker who holds shares as nominee for several
beneficial owners may exercise appraisal rights with respect to the shares held
for one or more other beneficial owners while not exercising appraisal rights
with respect to the shares held for one or more beneficial owners; in such case,
the written demand should set forth the number of shares as to which appraisal
is sought, and where no number of shares is expressly mentioned, the demand will
be presumed to cover all shares held in the name of the record owner.
STOCKHOLDERS WHO HOLD THEIR SHARES IN BROKERAGE ACCOUNTS OR OTHER NOMINEE FORMS
AND WHO WISH TO EXERCISE APPRAISAL RIGHTS ARE URGED TO CONSULT WITH THEIR
BROKERS TO DETERMINE APPROPRIATE PROCEDURES FOR THE MAKING OF A DEMAND FOR
APPRAISAL BY THE NOMINEE.
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time of the merger, be entitled to
vote the shares subject to that demand for any purpose or be entitled to the
payment of dividends or other distributions on those shares (except dividends or
other distributions payable to holders of record of shares as of a record date
before the effective time of the merger).
Any stockholder may withdraw its demand for appraisal and accept $9.75 per
share by delivering to Uno a written withdrawal of the stockholder's demand for
appraisal. However, any such attempt to withdraw made more than 60 days after
the effective date of the merger will require written approval of Uno as the
surviving corporation. No appraisal proceeding in the Delaware Court of Chancery
will be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just. If Uno
as the surviving corporation does not approve a stockholder's request to
withdraw a demand for appraisal when that approval is required, or if the
Delaware Court of Chancery does not approve the dismissal of an appraisal
proceeding, the stockholder will be entitled to receive only the appraised value
determined in any such appraisal proceeding, which value could be more than, the
same as or less than $9.75 per share.
A stockholder who elects to exercise appraisal rights under Section 262
should mail or deliver a written demand to Uno Restaurant Corporation, 100
Charles Park Road, West Roxbury, Massachusetts 02132, Attn.: George W. Herz II,
Secretary.
NOTICE BY UNO. Within 10 days after the effective time of the merger, Uno,
the surviving corporation, must send a notice as to the effectiveness of the
merger to each former stockholder of Uno who (1) has made a written demand for
appraisal in accordance with Section 262 and (2) has not voted to approve and
adopt, nor consented to, the merger agreement.
Under the merger agreement, Uno has agreed to give Parent prompt notice of
any demands for appraisal received by Uno. In addition, a condition to the
completion of the merger requires the holders of no more than 5% of the total
number of outstanding shares of Uno common stock request to exercise their
appraisal rights. Parent has the right to participate in all negotiations and
proceedings with respect to demands for appraisal under the DGCL. Uno will not,
except with the prior written consent of Parent, make any payment with respect
to any demands for appraisal, or offer to settle, or settle, any such demands.
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Within 120 days after the effective time of the merger, any former
stockholder of Uno who has complied with the provisions of Section 262 to that
point in time will be entitled to receive from Uno as the surviving corporation,
upon written request, a statement setting forth the aggregate number of shares
not voted in favor of the merger agreement and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Uno as the surviving corporation must mail that statement to the stockholder
within 10 days of receipt of the request or within 10 days after expiration of
the period for delivery of demands for appraisals under Section 262, whichever
is later.
FILING A PETITION FOR APPRAISAL. Within 120 days after the effective date
of the merger, either Uno as the surviving corporation or any stockholder who
has complied with the requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the value of the shares
of common stock held by all such stockholders. Uno is under no obligation, and
has no present intent, to file a petition for appraisal, and stockholders
seeking to exercise appraisal rights should not assume that Uno as the surviving
corporation will file such a petition or that it will initiate any negotiations
with respect to the fair value of the shares. Accordingly, stockholders who
desire to have their shares appraised should initiate any petitions necessary
for the perfection of their appraisal rights within the time and the manner
prescribed in Section 262. Inasmuch as Uno has no obligation to file such a
petition, the failure of a stockholder to do so within the time specified could
nullify the stockholder's previous written demand for appraisal.
A stockholder timely filing a petition for appraisal with the Delaware Court
of Chancery must deliver a copy to Uno as the surviving corporation, which will
then be obligated within 20 days to provide the Register in Chancery with a duly
verified list containing the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements as to the value of
their shares have not been reached by Uno as the surviving corporation. After
notice to those stockholders, the Delaware Court of Chancery may conduct a
hearing on the petition to determine which stockholders have become entitled to
appraisal rights. The Delaware Court of Chancery may require stockholders who
have demanded an appraisal of their shares and who hold stock represented by
certificates to submit their certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings. If any
stockholder fails to comply with the requirement, the Delaware Court of Chancery
may dismiss the proceedings as to that stockholder.
DETERMINATION OF FAIR VALUE. After determining the stockholders entitled to
an appraisal, the Delaware Court of Chancery will appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
STOCKHOLDERS CONSIDERING SEEKING APPRAISAL SHOULD BE AWARE THAT THE FAIR
VALUE OF THEIR SHARES AS DETERMINED UNDER SECTION 262 COULD BE MORE THAN, THE
SAME AS OR LESS THAN THE $9.75 PER SHARE THEY WOULD RECEIVE UNDER THE MERGER
AGREEMENT IF THEY DID NOT SEEK APPRAISAL OF THEIR SHARES. STOCKHOLDERS SHOULD
ALSO BE AWARE THAT INVESTMENT BANKING OPINIONS ARE NOT OPINIONS AS TO FAIR VALUE
UNDER SECTION 262.
In determining fair value and, if applicable, a fair rate of interest, the
Delaware Court of Chancery is to take into account all relevant factors. In
Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal proceeding,
stating that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered and that "fair price obviously requires
consideration of all relevant factors involving the value of a company." The
Delaware Supreme Court stated that, in making this determination of fair value,
the court must consider "market value, asset value, dividends, earnings
prospects, the nature of the enterprise and any other facts which were known or
which could be ascertained as of the date of the merger and which
85
throw any light on future prospects of the merged corporation." Furthermore, the
court may consider "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger
and not the product of speculation."
The costs of the action may be determined by the Delaware Court of Chancery
and taxed upon the parties as the Delaware Court of Chancery deems equitable.
Upon application of a dissenting stockholder, the Delaware Court of Chancery may
also order that all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all of the shares entitled to appraisal.
ANY STOCKHOLDER WISHING TO EXERCISE APPRAISAL RIGHTS IS URGED TO CONSULT
LEGAL COUNSEL BEFORE ATTEMPTING TO EXERCISE APPRAISAL RIGHTS. FAILURE TO COMPLY
STRICTLY WITH ALL OF THE PROCEDURES SET FORTH IN SECTION 262 OF THE DELAWARE
GENERAL CORPORATION LAW MAY RESULT IN THE LOSS OF A STOCKHOLDER'S STATUTORY
APPRAISAL RIGHTS.
LITIGATION CHALLENGING THE MERGER
On October 25, 2000, Bruce Cox filed a class action complaint in the Court
of Chancery of the State of Delaware for New Castle County against Uno, Aaron D.
Spencer and each of the current directors of Uno. The complaint alleges that the
directors breached their fiduciary duties to the plaintiff because Mr. Spencer
and certain members of senior management of Uno timed a proposed acquisition of
the outstanding shares of Uno in order to freeze out Uno's public stockholders
and to capture for themselves Uno's future potential without paying an adequate
or fair price to Uno's public stockholders. The plaintiff seeks to have the
action maintained as a class action, to have the defendants enjoined from
proceeding with or closing the proposed transaction and to recover unspecified
costs of the action. The class is alleged to include all public shareholders of
Uno, excluding the defendants and their affiliates. Uno has filed a motion to
dismiss on the basis of ripeness and intends to defend vigorously against the
complaint.
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THE MERGER AGREEMENT
The description of the merger agreement contained in this proxy statement
describes the material terms of the merger agreement. A complete copy of the
merger agreement, without exhibits, appears in Exhibit A to this proxy statement
and is incorporated by reference. You are urged to read the entire merger
agreement as it is the legal document that governs the merger.
THE MERGER
The merger agreement provides that, subject to the conditions summarized
below, Newco will merge with and into Uno. Upon completion of the merger, Newco
will cease to exist and Uno will continue as the surviving corporation.
EFFECTIVE TIME OF MERGER
The merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of Delaware in accordance with the
Delaware General Corporation Law or at such later time as is specified in the
certificate of merger. This time is referred to as the "effective time." The
filing is expected to occur as soon as practicable after adoption and approval
of the merger agreement by Uno stockholders at the special meeting and
satisfaction or waiver of the other conditions to the merger set forth in the
merger agreement.
CERTIFICATE OF INCORPORATION, BYLAWS AND DIRECTORS AND OFFICERS OF UNO AS THE
SURVIVING CORPORATION
When the merger is completed:
- the certificate of incorporation of Newco as in effect immediately prior
to the effective time will be the certificate of incorporation of Uno as
the surviving corporation;
- the bylaws of Newco in effect immediately prior to the effective time will
be the bylaws of Uno as the surviving corporation;
- the directors of Newco immediately prior to the effective time will become
the directors of Uno as the surviving corporation; and
- the officers of Newco immediately prior to the effective will become
officers of Uno as the surviving corporation.
CONVERSION OF COMMON STOCK
At the effective time, each outstanding share of Uno common stock will
automatically be converted into and represent the right to receive $9.75 in
cash, without interest, referred to as the merger consideration, except for:
- shares of Uno common stock held by Parent that will be converted into an
equal number of shares of common stock of Uno, as the surviving
corporation in the merger;
- shares held by stockholders seeking appraisal rights in accordance with
Delaware law; and
- shares held by Uno in treasury that will be canceled without any payment
thereon.
At the effective time, each outstanding share of capital stock of Newco will
be converted into and exchanged for that number of shares of common stock of Uno
as the surviving corporation, equal to that number of shares of Uno common stock
outstanding immediately before the effective time, less the number of shares of
Uno common stock held by Parent at the effective time.
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PAYMENT FOR SHARES
When and as needed, but in any event prior to or simultaneous with the
effective time, Parent or Newco will deposit with the paying agent appointed by
Parent sufficient funds to pay the merger consideration. Promptly after the
effective time, Uno as the surviving corporation will cause to be mailed to each
record holder of shares of Uno common stock immediately prior to the effective
time a letter of transmittal and instructions to effect the surrender of their
certificate(s) in exchange for payment of the merger consideration.
STOCKHOLDERS OF UNO SHOULD NOT FORWARD STOCK CERTIFICATES TO THE PAYING
AGENT UNTIL THEY HAVE RECEIVED THE LETTER OF TRANSMITTAL.
The holder will be entitled to receive $9.75 per share only upon surrender
to the paying agent of a share certificate, together with such letter of
transmittal, duly completed in accordance with the instructions thereto. If
payment of the merger consideration is to be made to a person whose name is
other than that of the person in whose name the share certificate is registered,
it will be a condition of payment that (1) the share certificate so surrendered
be properly endorsed or otherwise in proper form for transfer and (2) the person
requesting such exchange pay any transfer or other taxes that may be required to
the satisfaction of the paying agent. No interest will be paid or accrued upon
the surrender of the share certificates for the benefit of holders of the share
certificates on any merger consideration.
One year following the effective time, Parent will cause the paying agent to
deliver to Uno as the surviving corporation all cash and documents in its
possession, which have been deposited with the paying agent and which have not
been disbursed to holders of share certificates. Thereafter, holders of
certificates representing shares of Uno common stock outstanding before the
effective time will surrender their certificates to Uno as the surviving
corporation and will be entitled to look only to Uno as the surviving
corporation for payment of any claims for merger consideration to which they may
be entitled. Uno, Parent, Newco and the paying agent will not be liable to any
person in respect of any merger consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
TRANSFER OF SHARES
At the effective time, the stock transfer books of Uno will be closed and
there will be no further transfers on the records of Uno as the surviving
corporation, or its transfer agent of certificates representing shares of Uno
common stock outstanding before the effective time and any such certificates
presented to Uno as the surviving corporation for transfer, other than shares
held by stockholders seeking appraisal rights, will be canceled. From and after
the effective time, the holders of share certificates representing shares of Uno
common stock before the effective time will cease to have any rights with
respect to these shares except as otherwise provided for in the merger agreement
or by applicable law. All merger consideration paid upon the surrender for
exchange of those share certificates in accordance with the terms of the merger
agreement will be deemed to have been issued and paid in full satisfaction of
all rights pertaining to the share certificates.
TREATMENT OF STOCK OPTIONS
Each outstanding option granted under Uno's stock option plans will remain
outstanding and subject to the terms pursuant to which the options were issued.
UNO STOCKHOLDER APPROVAL
Uno has agreed to use its reasonable efforts to solicit proxies in favor of
the adoption and approval of the merger agreement, provided that the special
committee and the board of directors may each withdraw or modify its respective
recommendation relating to the merger agreement and the merger if the special
committee or the board of directors determines in good faith after consultation
88
with its legal and financial advisor that the merger is no longer in the best
interests of Uno's stockholders and that such withdrawal or modification is,
therefore, advisable in order to satisfy its fiduciary duties to Uno's
stockholders.
INDEMNIFICATION AND INSURANCE
The merger agreement provides that Uno as the surviving corporation will,
for six years after the effective time of the merger, continue to honor all
indemnification obligations in force as of the date of the merger agreement and
will not amend, repeal or otherwise modify those obligations in a way that would
adversely affect the rights of the individuals who are covered by the
indemnification obligations. In addition, following the completion of the
merger, Uno as the surviving corporation is required to indemnify, defend, and
hold harmless all current and former officers, directors and employees of Uno
and its subsidiaries from all liabilities, costs, damages, expenses and claims
arising out of actions taken before the effective time in performance of their
duties as directors or officers of Uno or any subsidiaries in connection with
the transactions contemplated by the merger agreement. In addition, Uno is
required to maintain its directors and officers' liability insurance policies in
effect for six years after the effective time of the merger, except that Parent
or Uno, as the surviving corporation will not be required to pay annual
insurance premiums in excess of 300% of the premiums it currently pays. Parent
has agreed to cause Uno as the surviving corporation to comply with the
obligations described in this paragraph and Parent has agreed to guaranty the
obligations of Uno, as the surviving corporation.
REPRESENTATIONS AND WARRANTIES
ALL REPRESENTATIONS AND WARRANTIES ARE SUBJECT TO VARIOUS QUALIFICATIONS AND
LIMITATIONS. THE SECTION REFERENCE IN THE PARENTHETICAL FOLLOWING EACH BULLET
POINT DIRECTS YOU TO THE SECTION OF THE MERGER AGREEMENT WHERE THESE
QUALIFICATIONS AND LIMITATIONS TO THE REPRESENTATIONS AND WARRANTIES ARE
DESCRIBED.
The merger agreement contains various customary representations and
warranties of Uno (which will not survive completion of the merger) relating to,
among other things:
- Uno's due organization, valid existence, good standing and necessary
corporate power and authority of Uno and its subsidiaries to carry on
their business (see Section 2.1);
- Uno's restated certificate of incorporation, as amended, and amended and
restated bylaws and the equivalent document for each of the subsidiaries
of Uno (see Section 2.2);
- the capitalization of Uno (see Section 2.3);
- authorization, execution, delivery and enforceability of the merger
agreement (see Section 2.4);
- the absence of any conflicts between the merger agreement and Uno's
restated certificate of incorporation, as amended, and amended and
restated bylaws, and charter or bylaws of any Uno subsidiary, and any
applicable laws (see Section 2.5);
- the absence of consents, approvals, authorizations or permits of
governmental authorities, except those specified in the merger agreement,
required for Uno to complete the merger (see Section 2.5);
- the absence of material liabilities or obligations, except as disclosed in
Uno's reports filed with the Securities and Exchange Commission and
certain liabilities or obligations specified in the merger agreement (see
Section 2.8);
- the adequacy and accuracy of filings made by Uno with the Securities and
Exchange Commission (see Section 2.6);
- the accuracy of information concerning Uno in this proxy statement (see
Section 2.10);
89
- the conduct of Uno's business and operations in the ordinary course of
business since October 2, 2000, except as disclosed in Uno's reports filed
with the Securities and Exchange Commission and the absence of any
material adverse effect, any amendments or changes in the restated
certificate of incorporation, as amended, or amended and restated bylaws
of Uno, and any sale of a material amount of property of Uno or any of its
subsidiaries (see Section 2.7);
- the absence of any action, claim, suit, investigation or proceeding
actually pending or threatened against Uno or its subsidiaries that if
adversely determined, would, individually or in the aggregate, be
reasonably expected to have a material adverse effect on Uno's business or
operations, except for those disclosed in Uno's reports filed with the
Securities and Exchange Commission (see Section 2.9);
- brokers', finders' and investment bankers' fees (see Section 2.12);
- the inapplicability of Delaware anti-takeover laws (see Section 2.13); and
- approval of the merger agreement by the holders of Uno's outstanding
shares of common stock as being the only vote of the holders of any class
or series of Uno's capital stock necessary under Uno's restated
certificate of incorporation, as amended, and Delaware law to approve the
merger agreement (see Section 2.14).
The merger agreement contains various customary representations and
warranties of Parent and Newco (which will not survive completion of the merger)
relating to, among other things:
- the due organization, valid existence, good standing and necessary
corporate power and authority of Parent and Newco to carry on their
business (see Section 3.1);
- the capitalization of Parent and Newco (see Section 3.2);
- the authorization, execution, delivery and enforceability of the merger
agreement (see Section 3.3);
- the absence of consents, approvals, authorization or permits of
governmental authorities, except those specified in the merger agreement,
required for Parent or Newco to complete the merger (see Section 3.4);
- the absence of any conflicts between the merger agreement and Parent's or
Newco's certificate of incorporation or bylaws, any applicable law or
other contracts or documents (see Section 3.4);
- the accuracy of information concerning information provided by Parent or
Newco in connection with this proxy statement (see Section 3.5);
- the transferring by the members of the Spencer Group of their shares of
Uno common stock to Parent and the voting by the Continuing Stockholders
of their shares of Uno common stock in favor of the merger agreement (see
Section 3.6);
- brokers', finders' and investment bankers' fees (see Section 3.7);
- financing commitments obtained from third parties in connection with the
merger (see Section 3.8);
- the accuracy of filings made by Parent with the Securities and Exchange
Commission (see Section 3.9); and
- the review of the representations and warranties of Uno by Parent and the
Continuing Stockholders (see Section 3.10).
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CONDUCT OF BUSINESS PENDING THE MERGER
Uno is subject to restrictions on its conduct and operations until the
merger is completed. In the merger agreement, Uno has agreed that, prior to the
effective time, it will operate its business only in the ordinary course
consistent with past practice and will not issue shares of stock or other equity
interests, except for the issuance of common stock issued pursuant to the
exercise of outstanding stock options.
NO SOLICITATION
Uno has agreed that it will not, and it will cause its subsidiaries not to,
authorize or permit its respective officers, directors, representatives or
agents to, directly or indirectly, encourage, solicit, initiate or knowingly
encourage any inquiries or proposals, or engage in negotiations or discussions
concerning, or provide any non-public information to any person relating to, or
agree to approve or recommend any (i) tender offer or exchange offer by a third
party for more than 50% of Uno's common stock; (ii) merger or other business
combination with respect to Uno in which the third party acquires 50% or more of
Uno's outstanding common stock; (iii) other transaction pursuant to which a
third party acquires control of 50% or more of the fair market value of Uno's
assets, (iv) public announcement by a third party of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing, (v) self tender offer, or (vi) going private transaction other than
the transaction contemplated by the merger agreement. Each of the foregoing
types of transactions is referred to as an "acquisition proposal."
However, if the special committee or Uno's board of directors receives an
unsolicited proposal for or request to discuss any competing transaction from a
person that was not solicited by Uno after the date of the merger agreement, the
special committee on behalf of Uno may supply non-public information to that
person as, and to the extent that, the special committee believes that to do so
could reasonably lead to a superior proposal. Supplying non-public information
under these circumstances must be subject to a customary confidentiality
agreement. A superior proposal is defined as an acquisition proposal that
(i) is not subject to any financing contingencies or is, in the good faith
judgment of the special committee after consultation with its financial advisor,
reasonably capable of being financed and (ii) the special committee determines
in good faith, based upon matters it deems relevant, would, if completed, result
in a transaction more favorable to Uno's stockholders, other than Parent and its
affiliates, from a financial point of view than the merger.
Uno has agreed to notify Parent promptly of any such proposals or inquiries,
and thereafter to keep Parent informed as to the status of any such proposals or
inquiries. At least ten days prior to either accepting any superior proposal or
any change by the board of directors or the special committee in their
respective recommendations of the merger (if following the receipt of any
acquisition proposal), Uno is required to notify Parent of the acquisition
proposal and its material terms. During this ten day period, the special
committee is required to negotiate in good faith with Parent to determine
whether Parent can or is willing to make a proposal that is superior to the
superior proposal.
In the event a third party proposes to the board of directors or the special
committee that it has an interest in acquiring more than 10%, but less than 50%
of the outstanding shares of common stock of Uno pursuant to a tender offer or
exchange offer or otherwise, the special committee has agreed to notify Parent,
orally and in writing, of the existence of such interest and the material terms
and conditions of the proposal. The special committee may thereafter engage in
discussions concerning the proposal, provided the special committee does not
provide any confidential information regarding Uno to the third party. The
special committee has also agreed that it will, to the extent reasonably
practicable, inform Parent of the status of the discussions with the third
party.
The special committee or the board of directors may each withdraw or modify
its recommendation of the merger agreement or the merger if the board of
directors determines in good faith after
91
consultation with its financial advisor that the merger is no longer in the best
interests of Uno's stockholders and that the withdrawal or modification of its
recommendation of the merger agreement and the merger is advisable in order to
satisfy the board of directors fiduciary duties.
ACCESS TO INFORMATION
Uno has agreed that neither the board of directors nor the special committee
will cause Uno or any of its subsidiaries to not afford to the officers,
employees, counsel, accountants, financial advisors, and other representatives
of Parent or Newco or the financing sources of Parent or Newco, reasonable
access, during normal business hours, to Uno's or any of its subsidiaries'
properties, books, contracts, commitments and records. Uno further agreed that
neither the board of directors nor the special committee will cause Uno or any
of its subsidiaries to not (i) furnish promptly to Parent or Newco all
information concerning Uno's business, properties and personnel as Parent or
Newco may reasonably request or (ii) make available to Parent and Newco the
appropriate individuals for discussion of Uno's business properties and
personnel as either Parent or Newco may reasonably request and upon reasonable
notice.
CONDITIONS TO THE MERGER
CONDITIONS TO EACH PARTY'S OBLIGATION. The obligations of Uno, Parent and
Newco to complete the merger are subject to the satisfaction or waiver on or
prior to the effective time of the following conditions:
- the absence of any law, order or injunction that prohibits the completion
of the merger; and
- the merger and the merger agreement shall have been adopted and approved
by the holders of a majority of the outstanding shares of Uno common stock
that are not owned or controlled by Parent or the Continuing Stockholders.
CONDITIONS TO PARENT AND NEWCO'S OBLIGATION. The obligations of each of
Parent and Newco to complete the merger are subject to the satisfaction, or
waiver by Parent and Newco, on or prior to the effective time, of the following
conditions:
- the representations and warranties made by Uno in the merger agreement
must be true and correct in all material respects as of the date of the
merger agreement and as of the effective date;
- Parent must have received a certificate signed by an executive officer of
Uno as to compliance with the conditions specified in the immediately
preceding paragraph;
- Uno must have performed in all material respects all obligations under the
merger agreement required to be performed at or prior to the effective
time and Parent must have received a certificate signed by an executive
officer of Uno to such effect;
- holders of less than 5% of the outstanding shares of Uno common stock
exercise their right to appraisal under the Delaware General Corporation;
- Parent and Newco must have received financing on terms satisfactory to
Parent in its sole discretion sufficient to pay the merger consideration,
repay Uno's existing outstanding indebtedness and pay the fees and
expenses required to be paid by Uno and Parent in connection with the
transactions contemplated by the merger agreement;
- no claim, action, suit, proceeding or investigation shall have been
instituted or threatened pursuant to which an unfavorable judgment, order,
decree, stipulation or injunction sought would reasonably be expected to
(i) prevent the completion of any of the material transactions
contemplated by the merger agreement, (ii) cause any of the material
transactions contemplated by the merger agreement to be rescinded
following the completion thereof, or (iii) have a
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material adverse effect on Uno or Parent; other than the litigation filed
by Bruce Cox prior to the date of the merger agreement, unless there is a
material change in the status of the litigation (as further described in
the section entitled "--Special Factors--Litigation Challenging the
Merger.");
- Uno must have obtained all consents and approvals from third parties with
respect to the transactions contemplated by the merger agreement except
for consents and approvals that would, individually or in the aggregate,
not have a material adverse effect on Uno following completion of the
merger;
- the absence of any change, occurrence or situation, individually or in the
aggregate, that is not the result of actions within the control or
influence of the Spencer Group or the Management Group and that has had or
is reasonably likely to have a material adverse effect on Uno; and
- the absence of a material adverse change in the health of Aaron D.
Spencer.
CONDITIONS TO UNO'S OBLIGATION. The obligation of Uno to effect the merger
is subject to the satisfaction, or waiver by Uno, on or prior to the effective
time, of the following conditions:
- the representations and warranties of each of Parent and Newco must be
true and correct in all material respects as of the effective time;
- Uno must have received a certificate signed by an executive officer of
Parent as to compliance with the conditions specified in the immediately
preceding paragraph;
- each of Parent and Newco must have performed in all material respects all
obligations under the merger agreement required to be performed at or
prior to the effective time and Uno must have received a certificate
signed by an executive officer of Uno to such effect;
- Adams, Harkness & Hill shall have delivered to the special committee on or
within five days prior to the stockholders meeting, a bring down of their
fairness opinion; and
- no claim, action, suit, proceeding or investigation shall have been
instituted or threatened pursuant to which an unfavorable judgment, order,
decree, stipulation or injunction sought would reasonably be expected to
(1) prevent any of the material transactions contemplated by the merger
agreement, (2) cause any of the material transactions contemplated by the
merger agreement to be rescinded following the consummation of the
transactions, or (3) have a material adverse effect on Uno or Parent;
other than the litigation filed by Bruce Cox prior to the date of the
merger agreement, unless there is a material change in the status of the
litigation.
WAIVER
At any time prior to the effective time of the merger, any party to the
merger agreement may with respect to any other party hereto (i) extend the time
for the performance of any of the obligations or other acts, (ii) waive any
inaccuracies in the representations and warranties contained in the merger
agreement or in any document delivered pursuant to the merger agreement or
(iii) waive compliance with any of the agreements or conditions contained in the
merger agreement. Any waiver or extension of any provision of the merger
agreement by Uno must be approved in writing by the special committee. The
special committee, together with its financial and legal advisors and
representatives, will determine whether it is in the best interests of Uno and
its stockholders (other than the Continuing Stockholders) to waive a condition
which is for the benefit of Uno stockholders, including the condition that the
holders of a majority of shares of common stock held by the stockholders other
than the Continuing Stockholders approve and adopt the merger agreement.
However, if Uno and the special committee do waive such a condition, Uno will
only resolicit proxies from stockholders if required by law.
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TERMINATION OF THE MERGER AGREEMENT
Uno, Parent and Newco may agree by mutual written consent to terminate the
merger agreement at any time before the effective time. In addition, Parent may
terminate the merger agreement if:
- the merger is not completed on or before September 30, 2001, unless the
failure to complete the merger is due to the failure of Parent to fulfill
its obligations in any material respect under the merger agreement;
- the Uno board of directors or the special committee withdraw or modify in
a manner adverse to Parent or Newco, or publicly take a position
materially inconsistent with its approval or recommendation of the merger,
or the Uno board of directors or the special committee approve, endorse or
recommend another acquisition proposal;
- Uno breaches any of its representations, warranties or covenants as set
forth in the merger agreement, such that the conditions to the obligations
of Parent and Newco described above relating to the representations,
warranties and agreements of Uno are not satisfied and such breach or
failure is not cured in the 20-day period following notice of the breach
or failure from Parent;
- a claim, action, suit or investigation has been instituted or threatened
pursuant to which a judgment or injunction sought would reasonably be
expected to (1) prevent any of the material transactions contemplated by
the merger agreement, (2) cause any of the material transactions
contemplated by the merger agreement to be rescinded following the
completion of the transactions, or (3) have a material adverse effect on
Uno or Parent, or if such a judgment, order or injunction is in effect,
other than certain litigation filed prior to the date of the merger
agreement;
- the conditions described above under the headings "--Conditions to the
Merger; Conditions to Parent and Newco's Obligation" and "--Conditions to
the Merger; Conditions to Each Party's Obligation" with respect to
Parent's obligation to complete the merger (other than the condition that
the merger agreement be adopted and approved by the holders of a majority
of the outstanding shares of Uno common stock that are not owned or
controlled by Parent or the Continuing Stockholders) become impossible to
fulfill; or
- a court or governmental authority shall have issued a non-appealable final
order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the merger.
Uno may terminate the merger agreement if:
- a court or governmental authority shall have issued a non-appealable final
order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the merger;
- the merger is not completed on or before September 30, 2001, unless the
failure to complete the merger is due to the failure of Uno to fulfill its
obligations in any material respect under the merger agreement;
- Parent or Newco breaches any of its representations, warranties or
covenants as set forth in the merger agreement, such that the conditions
to the obligations of Uno described above relating to the representations,
warranties and agreements of Parent and Newco are not met and such breach
or failure is not cured in the 20-day period following notice of such
breach or failure from Uno;
- a claim, action, suit, proceeding or investigation has been instituted or
threatened pursuant to which a judgment or injunction sought would
reasonably be expected to (1) prevent any of the
94
material transactions contemplated by the merger agreement, (2) cause any
of the material transactions contemplated by the merger agreement to be
rescinded following the completion of the transactions, or (3) have a
material adverse effect on Uno or Parent, or if such a judgment, order or
injunction is in effect, other than certain litigation filed prior to the
date of the merger agreement; or
- the conditions described above under the headings "--Conditions to the
Merger; Conditions to Uno's Obligation" and "--Conditions to the Merger;
Conditions to Each Party's Obligation" with respect to Uno's obligation to
complete the merger (other than the condition that the merger agreement be
adopted and approved by the holders of a majority of the outstanding
shares of Uno common stock that are not owned or controlled by Parent or
the Continuing Stockholders) become impossible to fulfill.
The merger agreement may also be terminated if Uno has received an
acquisition proposal that the special committee has concluded, based on the
advice of a nationally recognized investment banking firm, is a superior
proposal and the special committee determines in good faith, in consultation
with outside counsel, that it is advisable to do so in order to comply with its
fiduciary duties.
Generally, if the merger agreement is terminated, other than as described
below, there will be no liability on the part of Uno, Parent or Newco or any of
their affiliates, directors, officers, employers or stockholders. However, no
party will be relieved from liability for willful breaches of the merger
agreement.
In the event the merger agreement is terminated for one of the reasons
described below, Uno will be required to reimburse Parent and Newco for one of
the following amounts depending on the reason why the merger agreement is
terminated. First, if the reason for the termination of the merger agreement is
not within the reasonable control of the stockholders of Parent, Uno must
reimburse Parent for up to $500,000 of Parent's and Newco's reasonable expenses.
Second, Uno will reimburse up to $1,500,000 of Parent's and Newco's expenses if
the merger agreement is terminated by Uno because (1) the special committee or
the board of directors fails to recommend approval of the merger agreement or
modifies its recommendation in a manner adverse to Parent or Newco, (2) a claim
or suit is threatened or instituted which could prevent or rescind the merger or
have a material adverse effect on Uno or Parent, or (3) the special committee
discusses a proposed acquisition by a third party to acquire more than 10% and
less than 50% of the outstanding common stock of Uno, the third party acquires
shares of Uno's common stock and the merger agreement is not approved by the
holders of a majority of the shares of common stock held by stockholders other
than the Continuing Stockholders at the special meeting. Finally, in the event
that the merger agreement is terminated by Uno because the special committee
accepts a superior proposal, Uno will pay Parent a termination fee of $1,500,000
and will reimburse up to $1,500,000 of Parent's and Newco's expenses.
EXPENSE REIMBURSEMENT
Except for the reimbursement of expenses to Parent in the event of
termination of this merger agreement as described above, all fees and expenses
incurred in connection with the merger agreement and the transactions
contemplated by the merger agreement will be paid by the party incurring the
expenses, whether or not the merger is completed. In addition, prior to the
merger agreement, Uno agreed to reimburse $100,000 of the expenses of the
Continuing Stockholders incurred in connection with their going private
proposal. Mr. Spencer has guaranteed the obligations of Parent and Newco under
the merger agreement pursuant to a limited recourse guaranty. Uno has recourse
under Mr. Spencer's guaranty only to a maximum of 500,000 shares of
Mr. Spencer's Uno common stock and not to Mr. Spencer personally. Mr. Spencer's
guaranty also covers the obligations of Parent to pay its fees, expenses and
indemnification obligations to Fleet National Bank, N.A. and SunTrust Bank, in
connection with the senior credit facilities. Mr. Spencer may, in his
discretion, satisfy his obligations
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under the guaranty by delivering shares of Uno common stock which will be deemed
to have a value of $9.75 per share. See "Special Factors--Merger Financing."
AMENDMENTS
The merger agreement may be amended by the parties at any time before or
after any required approval of matters presented in connection with the merger
by the stockholders; provided, however, that after any such approval, there
shall be made no amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. The merger
agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
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COMMON STOCK PURCHASE INFORMATION
PURCHASES BY UNO
The table below sets forth information, by fiscal quarters, regarding
purchases by Uno of its common stock since March 30, 1999, including the number
of shares purchased, the range of prices paid and the average purchase price.
All information set forth below is adjusted for a 10% stock dividend declared on
November 30, 1999 and paid on December 23, 1999 to stockholders of record on
December 13, 1999. Total treasury shares increased by 372,827 shares as a result
of the stock dividend.
PERIOD NO. OF SHARES PRICE RANGE AVERAGE PURCHASE PRICE
- ------ ------------- ------------ ----------------------
Third Quarter 1999.............................. 305,800 $ 6.42-$7.22 $ 6.68
Fourth Quarter 1999............................. -- -- --
First Quarter 2000.............................. -- -- --
Second Quarter 2000............................. 463,505 $9.00-$10.00 $9.083
Third Quarter 2000.............................. 225,000 $ 9.875 $9.875
Fourth Quarter 2000............................. -- -- --
First Quarter 2001.............................. -- -- --
Second Quarter 2001............................. -- -- --
Third Quarter (through June 4, 2001)............ -- -- --
PURCHASES BY THE CONTINUING STOCKHOLDERS
The table below sets forth information regarding purchases by each of the
Continuing Stockholders of Uno common stock since March 30, 1999, including the
number of shares purchased, the range of prices paid and the average purchase
price:
AVERAGE
PURCHASE
NAME DATE NO. OF SHARES PRICE RANGE PRICE
- ---- ------------------- ------------- ----------- --------
Aaron D. Spencer(1)................... Third Quarter 1999 41,250 $8.55 $8.55
Uno Associates(1)..................... -- -- -- --
Mark Spencer(1)....................... -- -- -- --
Lisa Cohen(1)......................... -- -- -- --
Craig S. Miller....................... Third Quarter 1999 1,320 $7.27 $7.27
First Quarter 2000 7,430 $7.27 $7.27
Second Quarter 2000 25,625 $7.27 $7.27
Third Quarter 2000 9,275 $7.55 $7.55
Paul W. MacPhail...................... First Quarter 2000 130,174 $5.27-$7.39 $6.78
Alan M. Fox........................... Third Quarter 1999 1,100 $6.82 $6.82
First Quarter 2000 8,594 $7.27-$7.55 $7.49
Robert M. Vincent..................... Third Quarter 1999 1,100 $6.82 $6.82
- ------------------------
(1) Excludes Uno Associates' distribution in August 1999 of 2,200,000 shares on
a split adjusted basis to its three partners, Aaron Spencer, Mark Spencer
and Lisa Cohen. Mr. Spencer received 1,760,000 shares, and Mark Spencer and
Lisa Cohen each received 220,000 shares.
PURCHASES BY PARENT AND NEWCO AND THEIR DIRECTORS AND EXECUTIVE OFFICERS
Except as set forth above, none of Parent, Newco or any of their respective
directors or executive officers, has purchased any shares of Uno common stock
since March 30, 1999.
RECENT TRANSACTIONS
There have been no transactions in the common stock of Uno effected during
the last 60 days by Uno, any of its directors or executive officers, Parent,
Newco, or any Continuing Stockholder.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Uno as of April 18, 2001 by (1) all those known to Uno to be
beneficial owners of more than 5% of its common stock; (2) each director;
(3) each of Uno's chief executive officer and four other most highly compensated
executive officers; and (4) all executive officers and directors of Uno as a
group. Unless otherwise indicated, the address for each of the stockholders
listed below is c/o Uno Restaurant Corporation, 100 Charles Park Road, West
Roxbury, Massachusetts 02132.
SHARES OF
COMMON
STOCK BENEFICIALLY PERCENT OF
NAME OWNED (1) CLASS
- ---- ------------------ ----------
James F. Carlin (2)(5)..................................... 47,513 *
Tamara P. Davis (2)(6)..................................... 9,147 *
Alan M. Fox (2)(3)(4)...................................... 198,682 1.8
John T. Gerlach (2)........................................ 29,735 *
Kenneth D. Hill (2)........................................ 8,647 *
James J. Kerasiotes (2).................................... 8,147 *
Paul W. MacPhail (3)(4).................................... 1,164 *
Craig S. Miller (2)(3)(4)(7)(8)............................ 504,667 4.4
Aaron D. Spencer (2)(3)(9)(10)............................. 4,929,943 44.7
Uno Associates (10)........................................ 1,861,977 16.9
Robert M. Vincent (2)(3)(4)(11)............................ 137,596 1.2
Executive Officers and Directors as a Group (15
Persons)(12)............................................. 7,743,638 65.2
- ------------------------
* Represents less than 1%.
(1) Unless otherwise noted, the beneficial owners listed have sole voting and
investment power over the shares listed.
(2) Includes the following shares subject to currently exercisable options:
Mr. Carlin--17,463; Ms. Davis--8,147; Mr. Fox--195,777;
Mr. Gerlach--18,153; Mr. Hill--8,147; Mr. Kerasiotes--8,147;
Mr. Miller--467,575; Mr. Spencer--24,750; and Mr. Vincent--134,829.
(3) Includes the following shares held in participant accounts under the
employee stock ownership provision of Uno's Employee Stock Ownership Plan
(the "ESOP"): Mr. Fox--743; Mr. MacPhail--220; Mr. Miller--1,790;
Mr. Spencer--1,119; and Mr. Vincent--215. The voting power of these shares
is held by the trustees of the ESOP.
(4) Includes the following shares held in participant accounts under the 401(k)
savings provision of the ESOP: Mr. Fox--1,062; Mr. MacPhail--944;
Mr. Miller--1,115; and Mr. Vincent--902.
(5) Includes 10,050 shares beneficially owned by Mr. Carlin and 20,000 shares
held by Mr. Carlin's spouse.
(6) Includes 1,000 shares held by Ms. Davis's spouse in a revocable trust.
Ms. Davis disclaims beneficial ownership of these shares.
(7) Includes 5,462 shares held in a deferred compensation account.
(8) Includes 4,600 shares held by a trust created by Mr. Miller, and 220 shares
held by Mr. Miller's spouse.
(9) Includes 221,018 shares held by the Cheryl Spencer Memorial Foundation, a
charitable foundation of which Mr. Spencer is a trustee, and 233,557 shares
held by Lisa Cohen and 264,917 shares held by Mark Spencer, Mr. Spencer's
two adult children.
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(10) Uno Associates is a partnership owned 80% by Mr. Spencer and 10% by each of
Mark Spencer and Lisa Cohen. Mr. Spencer is deemed to be the beneficial
owner of all of the shares held by Uno Associates, and as a result is deemed
to be the beneficial owner of an aggregate of 6,791,920 shares, including
exercisable stock options (61.6% of the outstanding shares).
(11) Includes 550 shares held in a deferred compensation account.
(12) Includes all shares beneficially owned by the executive officers and
directors named and as described above, and an aggregate of 6,400 shares
subject to currently exercisable options held by two executive officers not
specifically named above.
INDEPENDENT AUDITORS
Uno's financial statements as of October 1, 2000 and October 3, 1999, and
for each of the years in the three-year period ended October 1, 2000,
incorporated by reference in this proxy statement, have been audited by Ernst &
Young, LLP, independent auditors, as stated in their report incorporated herein
by reference from Uno's Annual Report on Form 10-K for the year ended
October 1, 2000. Representatives of Ernst & Young, LLP are expected to be
available at the special meeting to respond to appropriate questions of
stockholders and to make a statement if they desire to do so.
FUTURE STOCKHOLDER PROPOSALS
If the merger is completed, there will be no public participation in any
future meetings of stockholders of Uno. However, if the merger is not completed,
Uno stockholders will continue to be entitled to attend and participate in Uno
stockholders' meetings. If the merger is not completed, Uno will inform its
stockholders, by press release or other means determined reasonable by Uno, of
the date by which stockholder proposals must be received by Uno for inclusion in
the proxy materials relating to the annual meeting, which proposals must comply
with the rules and regulations of the Commission then in effect.
WHERE STOCKHOLDERS CAN FIND MORE INFORMATION
Uno files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. In addition, because
the merger is a "going private" transaction, Uno has filed a Rule 13e-3
Transaction Statement on Schedule 13E-3 with respect to the merger. The
Schedule 13E-3, the exhibits to the Schedule 13E-3 and such reports, proxy
statements and other information contain additional information about Uno. Each
exhibit to the Schedule 13E-3, including the reports and opinions of Adams,
Harkness & Hill, Tucker Anthony and the other documentation relating to the
merger and the merger financing, will be made available for inspection and
copying at Uno's executive offices during regular business hours by any Uno
stockholder or a representative of a stockholder as so designated in writing.
Uno stockholders may read and copy the Schedule 13E-3 and any reports,
statements or other information filed by Uno at the Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Uno's filings with
the Commission are also available to the public from commercial document
retrieval services and at the website maintained by the Commission located at:
"http://www.sec.gov."
This proxy statement is being furnished to stockholders together with a copy
of Uno's Annual Report on Form 10-K for the year ended October 1, 2000 and its
Quarterly Report on Form 10-Q for the quarter ended April 1, 2001.
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The Commission allows Uno to "incorporate by reference" information into
this proxy statement. This means that Uno can disclose important information by
referring to another document filed separately with the Commission. The
information incorporated by reference is considered to be part of this proxy
statement. This proxy statement and the information that Uno files later with
the Commission may update and supersede the information incorporated by
reference. Similarly, the information that Uno later files with the Commission
may update and supersede the information in this proxy statement. Uno
incorporates by reference each document it files under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this proxy statement and before
the special meeting. Uno also incorporates by reference into this proxy
statement the following documents filed by it with the Commission under the
Exchange Act:
- Uno's Annual Report on Form 10-K for the year ended October 1, 2000;
- Uno's Quarterly Report on Form 10-Q for the quarters ended December 31,
2000 and April 1, 2001; and
- Uno's Current Report on Form 8-K dated May 29, 2001.
However, any references in these documents to the Private Securities
Litigation Reform Act and "safe harbor" protection for forward-looking
statements are specifically not incorporated by reference into this proxy
statement.
Uno undertakes to provide without charge to each person to whom a copy of
this proxy statement has been delivered, upon request, by first class mail or
other equally prompt means, within one business day of receipt of such request,
a copy of any or all of the documents incorporated by reference herein, other
than the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this proxy statement
incorporates. Requests for copies should be directed to Uno Restaurant
Corporation, 100 Charles Park Road, West Roxbury, Massachusetts 02132,
Attention: George W. Herz II, Secretary (telephone number: (617) 323-9200).
Document requests from Uno should be made by , 2001 in order to
receive them before the special meeting.
The proxy statement does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities, or the solicitation of a proxy, in any
jurisdiction to or from any person to whom it is not lawful to make any offer or
solicitation in such jurisdiction. The delivery of this proxy statement should
not create an implication that there has been no change in the affairs of Uno
since the date of this proxy statement or that the information herein is correct
as of any later date.
Stockholders should not rely on information other than that contained or
incorporated by reference in this proxy statement. Uno has not authorized anyone
to provide information that is different from that contained in this proxy
statement. This proxy statement is dated , 2001. No assumption should be
made that the information contained in this proxy statement is accurate as of
any date other than such date, and the mailing of this proxy statement will not
create any implication to the contrary.
100
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UNO RESTAURANT HOLDINGS CORPORATION
UNO ACQUISITION CORP.
AND
UNO RESTAURANT CORPORATION
DATED AS OF APRIL 19, 2001
TABLE OF CONTENTS
ARTICLE I................................................................. 1
Section The Merger.................................................. 1
1.1
Section Effective Date.............................................. 1
1.2
Section Effect of the Merger........................................ 1
1.3
Section Certificate of Incorporation, By-Laws....................... 2
1.4
Section Directors and Officers...................................... 2
1.5
Section Effect on Capital Stock..................................... 2
1.6
Section Payment Procedure........................................... 3
1.7
Section Stock Transfer Books........................................ 4
1.8
Section No Further Ownership Rights in Common Stock................. 4
1.9
Section Lost, Stolen or Destroyed Certificates...................... 4
1.10
Section Taking of Necessary Action; Further Action.................. 5
1.11
Section Stockholders' Meeting....................................... 5
1.12
Section Material Adverse Effect..................................... 5
1.13
ARTICLE II................................................................ 6
Section Organization and Qualification; Subsidiaries................ 6
2.1
Section Certificate of Incorporation and By-Laws.................... 6
2.2
Section Capitalization.............................................. 6
2.3
Section Authority Relative to this Agreement........................ 6
2.4
Section No Conflict; Required Filings and Consents.................. 6
2.5
Section SEC Filings; Financial Statements........................... 7
2.6
Section Absence of Certain Changes or Events........................ 8
2.7
Section No Undisclosed Liabilities.................................. 8
2.8
Section Absence of Litigation....................................... 8
2.9
Section Proxy Statement............................................. 8
2.10
Section Opinion of Financial Adviser................................ 8
2.11
Section Brokers..................................................... 8
2.12
Section Section 203 of Delaware Law Not Applicable.................. 8
2.13
Section Vote Required............................................... 9
2.14
ARTICLE III............................................................... 9
Section Organization and Qualification; Subsidiaries................ 9
3.1
Section Capitalization.............................................. 9
3.2
Section Authority Relative to this Agreement........................ 9
3.3
Section No Conflict, Required Filings and Consents.................. 9
3.4
Section Proxy Statement............................................. 10
3.5
Section Parent Stockholders......................................... 10
3.6
Section Brokers..................................................... 10
3.7
Section Financing................................................... 10
3.8
Section SEC Filings................................................. 11
3.9
Section Company Representations..................................... 11
3.10
ARTICLE IV................................................................ 11
Section Conduct of Business by the Company Pending the Merger....... 11
4.1
Section No Solicitation; Acquisition Proposals...................... 11
4.2
ARTICLE V................................................................. 13
Section Access to Information; Confidentiality...................... 13
5.1
Section Consents; Approvals......................................... 13
5.2
Section Indemnification and Insurance............................... 14
5.3
Section Notification of Certain Matters............................. 15
5.4
Section Further Action.............................................. 15
5.5
Section Public Announcements........................................ 15
5.6
Section Conveyance Taxes............................................ 16
5.7
Section Delisting of Securities..................................... 16
5.8
ARTICLE VI................................................................ 16
Section Conditions to Obligation of Each Party to Effect the 16
6.1 Merger......................................................
Section Additional Conditions to Obligation of Parent and 16
6.2 Acquisition Sub to Effect the Merger........................
Section Additional Conditions to Obligation of the Company to Effect 17
6.3 the Merger..................................................
Section Additional Provisions....................................... 18
6.4
ARTICLE VII............................................................... 18
Section Termination................................................. 18
7.1
Section Effect of Termination....................................... 19
7.2
Section Fees and Expenses........................................... 19
7.3
ARTICLE VIII.............................................................. 20
Section Effectiveness of Representations, Warranties and 20
8.1 Agreements..................................................
Section Notices..................................................... 20
8.2
Section Certain Definitions......................................... 21
8.3
Section Amendment................................................... 21
8.4
Section Waiver...................................................... 21
8.5
Section Headings.................................................... 22
8.6
Section Severability................................................ 22
8.7
Section Entire Agreement............................................ 22
8.8
Section Assignment; Guarantee of Acquisition Sub Obligations........ 22
8.9
Section Parties in Interest......................................... 22
8.10
Section Failure or Indulgence Not Waiver; Remedies Cumulative....... 22
8.11
Section Governing Law............................................... 22
8.12
Section Counterparts and Facsimile Signature........................ 22
8.13
Section Interpretation.............................................. 23
8.14
ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 19, 2001, is among UNO
RESTAURANT CORPORATION, a Delaware corporation (the "COMPANY"), UNO RESTAURANT
HOLDINGS CORPORATION, a Delaware corporation ("PARENT"), and UNO ACQUISITION
CORP., a Delaware corporation and a wholly owned subsidiary of Parent
("ACQUISITION SUB").
WHEREAS, the Boards of Directors of Parent, Acquisition Sub and the Company
have each approved the acquisition of the Company by Parent, by means of a
merger of Acquisition Sub with and into the Company (the "MERGER") in accordance
with the Delaware General Corporation Law (the "DELAWARE LAW") upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the Special Committee of the Board of Directors of the Company (the
"SPECIAL COMMITTEE") and the full Board of Directors of the Company (the
"BOARD") have each approved this Agreement and the transactions contemplated
hereby and declared the advisability and resolved to recommend approval of the
Merger and approval and adoption of this Agreement by the stockholders of the
Company, subject to the terms of this Agreement; and
WHEREAS, certain stockholders of the Company listed on Schedule 3.6 hereto
have agreed to transfer to Parent prior to the Effective Time (as defined below)
shares of common stock, par value $0.01 per share, of the Company (the "COMMON
STOCK") comprising approximately 58% of the outstanding shares of Common Stock
and to vote their shares in favor of this Agreement, provided that the Special
Committee does not withdraw is recommendation of the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Parent and Acquisition Sub hereby agree as follows:
ARTICLE I. THE MERGER
Section 1.1 THE MERGER.
(a) EFFECTIVE TIME. At the Effective Time, and subject to and upon the
terms and conditions of this Agreement and the Delaware Law, Acquisition Sub
shall be merged with and into the Company, the separate corporate existence of
Acquisition Sub shall cease, and the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "SURVIVING CORPORATION."
(b) CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Merger will take place as promptly
as practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of Nutter,
McClennen & Fish, LLP, One International Place, Boston, Massachusetts
02110-2699, unless another date and time or place is agreed to in writing by the
parties hereto (the date of such consummation shall be referred to herein as the
"CLOSING DATE").
Section 1.2 EFFECTIVE DATE. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI (and in any
event within two business days), the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger as contemplated by the Delaware
Law (the "CERTIFICATE OF MERGER"), together with any required related
certificate, with the Secretary of State of the State of Delaware, in such form
as required by, and executed in accordance with the relevant provisions of, the
Delaware Law (the time of such filing being the "EFFECTIVE TIME").
Section 1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the Delaware
A-1
Law. Without limiting the generality of the foregoing and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Company and Acquisition Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and Acquisition Sub shall
become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 CERTIFICATE OF INCORPORATION, BY-LAWS.
(a) CERTIFICATE OF INCORPORATION. At the Effective Time the Certificate of
Incorporation of Acquisition Sub, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by the Delaware Law and such
Certificate of Incorporation.
(b) BY-LAWS. At the Effective Time the By-Laws of Acquisition Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by the Delaware Law,
the Certificate of Incorporation of the Surviving Corporation and such By-Laws.
Section 1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors of
Acquisition Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-Laws of the Surviving Corporation, and
the officers of Acquisition Sub immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
Section 1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the Parent, Acquisition Sub, the
Company, or the holders of any of the following securities:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share (a "SHARE") of Common
Stock issued and outstanding (excluding (i) any Shares to be canceled pursuant
to Section 1.6(c), (ii) any Dissenting Shares (as defined in Section 1.6(f)) and
(iii) any Shares to be converted into Successor Corporation Shares (as defined
below) pursuant to Section 1.6(b)) shall cease to be outstanding and shall
automatically be canceled and retired and shall cease to exist and be converted
into the right to receive $9.75 in cash, without any interest thereon (the
"MERGER CONSIDERATION"), in accordance with Section 1.7 and each holder of any
such Shares shall cease to have any rights with respect thereto arising
therefrom (including without limitation the right to vote), except for the right
to receive the Merger Consideration in accordance with Section 1.7.
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time the outstanding Shares shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Merger Consideration shall be correspondingly adjusted on a
per-share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(b) CONVERSION OF CERTAIN COMPANY COMMON STOCK. Each Share owned by Parent
shall cease to be outstanding and shall automatically be canceled and retired
and shall cease to exist and be converted into the right to receive one validly
issued, fully paid and non-assessable share of common stock, par value $0.01 per
share, of the Surviving Corporation (the "SUCCESSOR CORPORATION SHARES"), and
Parent shall cease to have any rights with respect thereto arising therefrom
(including without limitation the right to vote), except for the right to
receive Successor Corporation Shares.
(c) CANCELLATION. Each Share held in the treasury of the Company or any
direct or indirect wholly owned subsidiary of the Company shall, by virtue of
the Merger and without any action on the part of the holder thereof, cease to be
outstanding, and be canceled and retired without payment of any consideration
therefor and cease to exist.
A-2
(d) STOCK OPTIONS. Each outstanding option to purchase Common Stock (a
"STOCK OPTION") granted under the stock option plans listed on Section 2.3(c) of
the Company Disclosure Schedule (as hereinafter defined) (the "COMPANY STOCK
OPTION PLANS") shall remain outstanding subject to the terms of the Company
Stock Option Plan pursuant to which such Stock Option was issued.
(e) CAPITAL STOCK OF ACQUISITION SUB. The shares of common stock, par value
$0.01 per share, of Acquisition Sub issued and outstanding shall be converted
into and exchanged for that number of validly issued, fully paid and
nonassessable Successor Corporation Shares equal to the number of Shares
outstanding immediately prior to the Effective Time less the number of Successor
Corporation Shares resulting pursuant to Section 1.6(b).
(f) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, Shares issued and outstanding immediately prior to the Effective Time
held by any person who has the right to demand, and who properly demands, an
appraisal of such Shares (the "DISSENTING SHARES") in accordance with
Section 262 of the Delaware Law (or any successor provision) shall not be
converted into the right to receive the Merger Consideration unless such holder
fails to perfect or otherwise loses such holder's right to such appraisal, if
any. If, after the Effective Time, such holder fails to perfect or loses any
such right to appraisal, each such Share of such holder shall be treated as a
Share that had been converted as of the Effective Time into the right to receive
the Merger Consideration in accordance with Section 1.6(a). At the Effective
Time, any holder of Dissenting Shares shall cease to have any rights with
respect thereto, except the rights provided in Section 262 of the Delaware Law
(or any successor provision) and as provided in the immediately preceding
sentence. The Company shall give prompt notice to Parent of any demands received
by the Company for appraisal of Shares and Parent shall have the right to
participate in and direct all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to, or settle or offer to settle, any such
demands.
Section 1.7 PAYMENT PROCEDURE.
(a) PAYMENT AGENT AND PROCEDURES. Prior to the Effective Time, a bank or
trust company shall be designated by Parent (the "PAYING AGENT") to act as agent
in connection with the Merger to receive the funds to which holders of Shares
shall become entitled pursuant to Section 1.6(a). Promptly after the Effective
Time, the Surviving Corporation shall cause to be mailed to each record holder,
as of the Effective Time, of a certificate or certificates (the "CERTIFICATES")
that immediately prior to the Effective Time represented Shares entitled to
receive Merger Consideration pursuant to Section 1.6(a) (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent, and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates for payment of the Merger
Consideration therefor. Upon the surrender of each Certificate formerly
representing Shares, together with such letter of transmittal and any additional
documents as may reasonably be required by Parent or the Paying Agent, in each
case, duly completed and validly executed in accordance with the instructions
thereto, the Paying Agent shall pay the holder of such Certificate (or such
other person as the holder shall designate in accordance with the letter of
transmittal) the Merger Consideration multiplied by the number of Shares
formerly represented by such Certificate, in exchange therefor, and such
Certificate shall forthwith be canceled. Until so surrendered and exchanged,
each such Certificate (other than Shares held by Parent, Acquisition Sub or the
Company, or any direct or indirect subsidiary thereof, and Dissenting Shares,
unless the holder of such Dissenting Shares fails to perfect or otherwise loses
such holder's right to appraisal, if any) shall represent solely the right to
receive the Merger Consideration. No interest shall be paid or accrue on the
Merger Consideration. If the Merger Consideration (or any portion thereof) is to
be delivered to any person other than to the person in whose name the
Certificate formerly representing Shares surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the Certificate so
surrendered shall be properly
A-3
endorsed or otherwise be in proper form for transfer and that the person
requesting such exchange shall pay to the Paying Agent any transfer or other
taxes required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
(b) CONSIDERATION. When and as needed, but in any event prior to or
simultaneous with the Effective Time, Parent or Acquisition Sub shall deposit or
cause to be deposited, in trust with the Paying Agent, the Merger Consideration
to which holders of Shares shall be entitled at the Effective Time pursuant to
Section 1.6(a) hereof.
(c) INVESTMENT OF MERGER CONSIDERATION. The Merger Consideration shall be
invested by the Paying Agent as directed by Parent, provided that such
investments shall be limited to (i) direct obligations of the United States of
America or (ii) obligations for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest.
(d) TERMINATION OF DUTIES. Promptly following the date that is one year
after the Effective Time, Parent will cause the Paying Agent to deliver to the
Surviving Corporation all cash and documents in its possession relating to the
transactions described in this Agreement and the Paying Agent's duties shall
terminate thereafter. Thereafter each holder of a Certificate formerly
representing a Share may surrender such Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar laws) receive
in exchange therefor the Merger Consideration without any interest thereon.
(e) NO LIABILITY. The Paying Agent, Parent, Acquisition Sub and the Company
shall not be liable to any holder of Common Stock for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) WITHHOLDING RIGHTS. Parent or the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Common Stock such amounts as Parent or the Paying
Agent is required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "CODE"), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Paying Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding was made by Parent or
the Paying Agent.
Section 1.8 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of the Common Stock thereafter on the records of the Company.
Section 1.9 NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. The Merger
Consideration delivered in exchange for the Shares in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Shares, and there shall be no further registration of
transfers on the records of the Surviving Corporation of Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
Section 1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent or the
Surviving Corporation shall deliver in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, the Merger Consideration as may be required pursuant to
Section 1.6; provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificate to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against Parent
or the Paying Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.
A-4
Section 1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent,
Acquisition Sub and the Company will take all such reasonable and lawful action
as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Acquisition Sub, the officers and directors of
the Company and Acquisition Sub immediately prior to the Effective Time are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
Section 1.12 STOCKHOLDERS' MEETING. The Company, acting through the Board,
shall, in accordance with applicable law, as soon as practicable following the
execution of this Agreement:
(a) duly call, give notice of, convene and hold an annual or special meeting
of its stockholders (the "STOCKHOLDERS' MEETING") for the purpose of considering
and taking action upon this Agreement;
(b) (i) prepare and file with the Securities and Exchange Commission (the
"SEC") a proxy statement (including, without limitation, a Schedule 13E-3
filing, if required to be filed under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")) or information statement (together with any
supplement or amendment thereto, the "PROXY STATEMENT") relating to the
Stockholders' Meeting in accordance with the Exchange Act and (ii) include in
the Proxy Statement the recommendation of the Special Committee and the Board
that stockholders of the Company vote in favor of the approval and adoption of
this Agreement and the transactions contemplated hereby, provided that the
Special Committee or the Board may withdraw or modify its recommendation
relating to this Agreement and the Merger if either the Special Committee or the
Board determines in good faith after consultation with its legal and financial
advisor that the Merger is no longer in the best interests of the Company's
stockholders (other than Parent and its affiliates) and that such withdrawal or
modification is, therefore, advisable in order to satisfy the Special
Committee's or the Board's fiduciary duties to the Company's stockholders under
applicable law; and
(c) use its commercially reasonable efforts (i) to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with Parent, respond promptly to any comments made by the SEC with
respect the Proxy Statement and any preliminary version thereof and cause the
Proxy Statement to be mailed to its stockholders at the earliest practicable
time following the execution of this Agreement in accordance with SEC rules and
regulations and (ii) to obtain the necessary approvals by its stockholders of
this Agreement and the transactions contemplated hereby.
At the Stockholders' Meeting, Parent and Acquisition Sub will vote all
Shares owned by them to approve this Agreement and the transactions contemplated
hereby.
Section 1.13 MATERIAL ADVERSE EFFECT. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as the
case may be, the term "MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance (that is not directly or indirectly a consequence of actions or
inactions within the control or influence of the party seeking to establish the
occurrence of a Material Adverse Effect) that is materially adverse to (a) the
business, assets, prospects, financial condition or results of operations of the
Company and its subsidiaries, or Parent and its subsidiaries, as the case may
be, in each case taken as a whole or (b) the Company's (including its
subsidiaries) or Parent's (including its subsidiaries), as the case may be,
ability to consummate the transactions contemplated by this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition Sub
that on the date hereof, except as set forth in the written disclosure schedule
delivered on or prior to the date hereof by the Company to Parent (the "COMPANY
DISCLOSURE SCHEDULE"):
Section 2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company and
each of its subsidiaries are corporations duly organized, validly existing and
in good standing under the respective laws of the jurisdictions of their
incorporation, except where the failure to be so organized, existing and in good
standing would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company and each of its subsidiaries
have the requisite corporate power and authority necessary to own, lease and
operate the properties they purport to own, lease or operate and to carry on
their business as they are now being conducted, except where the failure to have
such power and authority would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
Section 2.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore made available to Parent a true, complete and correct copy of its
Restated Certificate of Incorporation (the "RESTATED CERTIFICATE OF
INCORPORATION") and Amended and Restated By-Laws (the "AMENDED AND RESTATED
BY-LAWS"), each as amended to date, and has furnished or made available to
Parent the Certificate of Incorporation and By-Laws (or equivalent
organizational documents) of each of its subsidiaries (the "SUBSIDIARY
DOCUMENTS"). Such Amended and Restated Certificate of Incorporation, Amended and
Restated By-Laws and Subsidiary Documents are in full force and effect.
Section 2.3 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock and (ii) 1,000,000 shares of
preferred stock, par value $0.01 per share, none of which is issued and
outstanding and none of which is held in treasury. As of April 1, 2001,
(i) 10,994,271 shares of Common Stock were issued and outstanding, all of which
are validly issued, fully paid and nonassessable, and 4,784,262 shares of Common
Stock were held in treasury, (ii) no shares of Common Stock were held by
subsidiaries of the Company and (iii) 1,983,983 shares of Common Stock were
reserved for future issuance pursuant to outstanding Stock Options granted under
the Company Stock Option Plans. All of the outstanding shares of capital stock
of each of the Company's subsidiaries are duly authorized, validly issued, fully
paid and nonassessable.
Section 2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of the Company, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, other than the approval of this Agreement by the holders a
majority of the outstanding shares of Common Stock entitled to vote in
accordance with the Delaware Law and the Company's Restated Certificate of
Incorporation and Amended and Restated By-Laws (the "REQUISITE COMPANY VOTE").
The Board has approved this Agreement and the transactions contemplated hereby
and declared the advisability thereof. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Acquisition Sub, as applicable, constitutes
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.
Section 2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Restated Certificate of
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Incorporation or Amended and Restated By-Laws of the Company or any Subsidiary
Document or (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, except in
the case of (ii) only for any such conflicts, violations, breaches, defaults or
other occurrences that would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or pre-Effective Time filing with
or notification to, any national, federal, state, provincial or local
governmental, regulatory or administrative authority, agency, commission, court,
tribunal, arbitral body or self-regulated entity, domestic or foreign
(collectively, the "GOVERNMENTAL AUTHORITIES"), except for (i) (A) applicable
requirements, if any, of the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "SECURITIES ACT"), the Exchange Act,
state securities laws ("BLUE SKY LAWS"), (B) the filing and recordation of
appropriate merger or other documents as required by the Delaware Law,
(C) filings with the New York Stock Exchange (the "NYSE") and (D) filings with
or approvals of franchise regulatory authorities, licensing boards or agencies
under applicable alcohol and beverage laws and regulations, (E) regulatory
filings related to the operation of the Company's business and (F) filings in
connection with any applicable transfer or other taxes in applicable
jurisdictions, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
(A) prevent or materially delay consummation of the Merger, (B) otherwise
prevent or materially delay the Company from performing its obligations under
this Agreement, or (C) otherwise reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
Section 2.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since October 3, 1999 including, without limitation, (i) its
Annual Reports on Form 10-K for the fiscal years ended October 3, 1999 and
October 1, 2000, respectively, (ii) its Quarterly Report on Form 10-Q for the
period ended December 31, 2000, (iii) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
October 3, 1999, (iv) all other reports or registration statements filed by the
Company with the SEC since October 2, 2000 and (v) all amendments and
supplements to all such reports and registration statements filed by the Company
with the SEC since October 2, 2000 (collectively, the "COMPANY SEC REPORTS").
The Company SEC Reports (i) were prepared in all material respects in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and (ii) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC or any national securities exchange or
quotation service.
(b) Each of the consolidated financial statements (including, in each case,
any related notes and schedules thereto) contained in the Company SEC Reports
was prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto and in the case of the interim unaudited
financial statements as permitted by Form 10-Q), and each fairly presents in all
material respects the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
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Section 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Company SEC Reports, since October 2, 2000, the Company and its subsidiaries
have conducted their business in the ordinary course and there has not occurred:
(i) any Material Adverse Effect; (ii) any amendments or changes in the Restated
Certificate of Incorporation or Amended and Restated By-laws of the Company; and
(iii) any sale of a material amount of property of the Company or any of its
subsidiaries, except sales in the ordinary course of business or that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 2.8 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
except liabilities (a) in the aggregate adequately provided for in the Company's
unaudited balance sheet (including any related notes thereto) as of
December 31, 2000 (the "DECEMBER COMPANY BALANCE SHEET"), (b) incurred in the
ordinary course of business and not required under U.S. generally accepted
accounting principles to be reflected on the December Company Balance Sheet,
(c) incurred since December 31, 2000 in the ordinary course of business
consistent with past practice, (d) incurred in connection with this Agreement,
(e) disclosed in the Company SEC Reports or (f) which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 2.9 ABSENCE OF LITIGATION. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or any properties or
rights of the Company or any of its subsidiaries, before any Governmental
Authority or body, domestic or foreign, nor are there, to the Company's
knowledge, any investigations or reviews by any Governmental Authority pending
or threatened against, relating to or affecting, the Company or any of its
subsidiaries that, if adversely determined, would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Neither the
Company nor any of its subsidiaries is subject to any outstanding order, writ,
injunction or decree of any court or Governmental Authority which, individually
or in the aggregate, has resulted or could reasonably be expected to result in a
Material Adverse Effect.
Section 2.10 PROXY STATEMENT. The Proxy Statement or similar materials
distributed to the Company's stockholders in connection with the Merger,
including any amendments or supplements thereto, shall not, at the time filed
with the SEC, at the time mailed to the Company's stockholders or at the time of
the Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply in all material
respects with the provisions of the Exchange Act. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
provided by or required to be provided by Parent or Acquisition Sub and/or by
their auditors, legal counsel, financial advisors or other consultants or
advisors specifically for use in the Proxy Statement.
Section 2.11 OPINION OF FINANCIAL ADVISER. The Special Committee has
received the opinion of its financial advisor, Adams, Harkness & Hill, Inc.
("AH&H"), to the effect that, as of the date of this Agreement, the Merger
Consideration is fair to the Company's stockholders from a financial point of
view, and the Company has made available a copy of that opinion for Parent to
review.
Section 2.12 BROKERS. No broker, finder or investment banker (other than
AH&H) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Attached to the Company
Disclosure Schedule is a complete and correct copy of the agreement between the
Company and AH&H pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder.
Section 2.13 SECTION 203 OF DELAWARE LAW NOT APPLICABLE. The Board has taken
all actions so that the restrictions contained in Section 203 of the Delaware
Law applicable to a "business combination"
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(as defined in such Section 203) will not apply to the execution, delivery or
performance of this Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement.
Section 2.14 VOTE REQUIRED. The Requisite Company Vote is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under the charter documents of the Company, the Delaware Law, other applicable
law or otherwise) to approve this Agreement and the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION SUB
Parent and Acquisition Sub hereby, jointly and severally, represent and
warrant to the Company that, except as set forth in the written disclosure
schedule delivered on or prior to the date hereof, by Parent to the Company (the
"PARENT DISCLOSURE SCHEDULE"):
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent and
Acquisition Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, except where
the failure to be so organized, existing and in good standing would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Each of Parent and Acquisition Sub has the requisite corporate
power and authority and is in possession of all approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
have such power, authority and approvals would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Each of
Parent and Acquisition Sub is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 3.2 CAPITALIZATION. On the date hereof, the authorized capital stock
of each of Parent and Acquisition Sub consists of 1,000 shares of common stock,
par value $0.01 per share, 100 of which are issued. All of the issued and
outstanding shares of capital stock of Acquisition Sub are validly issued, fully
paid and nonassessable and are held by Parent. On the date hereof, all of the
issued and outstanding shares of capital stock of Parent are validly issued,
fully paid and nonassessable and are held by Aaron D. Spencer.
Section 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by each of Parent and Acquisition Sub and the consummation by
each of Parent and Acquisition Sub of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Acquisition Sub, and no other corporate proceedings on the part of
Parent or Acquisition Sub are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent and Acquisition Sub
enforceable against each of them in accordance with its terms.
Section 3.4 NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and Acquisition
Sub do not, and the performance of this Agreement by Parent and Acquisition Sub
will not, (i) conflict with or violate the
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Certificate of Incorporation (or equivalent organizational documents) or By-Laws
of Parent or Acquisition Sub, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
modification in a manner materially adverse to Parent or its subsidiaries of any
right or benefit under, or impair Parent's or any of its subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration, repayment or repurchase,
increased payments or cancellation under, or result in the creation of a Lien on
any of the properties or assets of Parent or any of its subsidiaries pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except in the case of (ii) or (iii) only, for any such conflicts,
violations, breaches, defaults or other occurrences that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent or its subsidiaries.
(b) The execution and delivery of this Agreement by each of Parent and
Acquisition Sub does not, and the performance of this Agreement by each of
Parent and Acquisition Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for (i) applicable requirements, if any, of the Securities
Act, the Exchange Act, the Blue Sky Laws, and the filing and recordation of
appropriate merger or other documents as required by the Delaware Law and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not (a) prevent or
materially delay consummation of the Merger, (b) otherwise prevent or materially
delay Parent or Acquisition Sub from performing their respective obligations
under this Agreement or (c) would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.5 PROXY STATEMENT. None of the information provided by Parent or
Acquisition Sub and/or by their auditors, legal counsel, financial advisors or
other consultants or advisors specifically for use in the Proxy Statement shall,
at the time filed with the SEC, at the time mailed to the Company's stockholders
or at the time of the Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Stockholders' Meeting, or the Closing, any event relating to Parent or any
of its Affiliates, officers or directors should be discovered by Parent that
should be set forth in a supplement to the Proxy Statement, Parent shall
promptly inform the Company.
Section 3.6 PARENT STOCKHOLDERS. Each of the persons listed on Schedule 3.6
to this Agreement (the "PARENT STOCKHOLDERS") has agreed to transfer to Parent
his or her Shares listed on Schedule 3.6 or has otherwise agreed to become a
stockholder of, or receive options to acquire an equity interest in, Parent on
or before the Closing Date, and each Parent Stockholder has agreed to vote his,
her or its Shares (to the extent that voting rights are retained after the
transfer to Parent) in favor of the Merger Agreement, provided that the Special
Committee has not withdrawn its recommendation of the Merger.
Section 3.7 BROKERS. No broker, finder or investment banker (other than
Tucker Anthony Incorporated ("TUCKER ANTHONY")) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Acquisition Sub. Parent has delivered to counsel to the Special
Committee a complete and correct copy of the agreement between the Parent and
Tucker Anthony pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder.
Section 3.8 FINANCING. Parent has delivered to the Company true and complete
copies of the financing commitment dated April 9, 2001 which, subject to the
terms and conditions contained therein, would provide sufficient financing to
enable Parent and Acquisition Sub to consummate the
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transactions contemplated by the Merger Agreement, including the Merger. Parent
and Acquisition Sub have no reason to believe that, as of the date hereof, the
conditions precedent to the consummation of the transactions contemplated by the
financing commitments would not reasonably be expected to be satisfied on or
before the Closing Date.
Section 3.9 SEC FILINGS. All forms, reports and documents required to be
filed by Parent with the SEC since October 3, 1999, including all reports on
Schedule 13D filed under the Exchange Act and amendments thereto, have been
filed with the SEC and are true and correct in all material respects.
Section 3.10 COMPANY REPRESENTATIONS. Parent and the Parent Stockholders who
are employees of the Company have reviewed the representations and warranties of
the Company and to the best of their knowledge all of such representations are
true and correct.
ARTICLE IV
CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, unless Parent shall
otherwise agree in writing, which agreement shall not be unreasonably withheld,
delayed or conditioned, neither the Board nor the Special Committee shall take
or direct any officer, employee or agent of the Company to take any action
(a) that shall cause the business of the Company or any of its subsidiaries to
be conducted other than in the ordinary course of business consistent with past
practice or (b) that shall result in the issuance of any shares of capital stock
of any class, or any options, warrants or other convertible or exchangeable
securities or other rights of any kind to acquire shares of capital stock of any
class, or any other ownership interest in the Company or any of its subsidiaries
(except for the issuance of shares of Common Stock issuable pursuant to Stock
Options that are issued and outstanding on the date hereof).
Section 4.2 NO SOLICITATION; ACQUISITION PROPOSALS.
(a) The Company shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or representative or
agent of the Company or any of its subsidiaries (including, without limitation,
any investment banker, financial advisor, attorney or accountant retained by the
Company or any of its subsidiaries) to, directly or indirectly, (i) solicit,
initiate or knowingly encourage (including by way of furnishing non-public
information), or take any other action to facilitate the initiation of any
inquiries or proposals regarding an Acquisition Proposal (as hereinafter
defined), (ii) engage in negotiations or discussions concerning, or provide any
nonpublic information to any person relating to, any Acquisition Proposal, or
(iii) agree to approve or recommend any Acquisition Proposal; provided, however,
that nothing contained in this Section 4.2 shall prohibit the Company or the
Board from taking and disclosing to stockholders a position contemplated by
Rule 14e-2 promulgated under the Exchange Act; and provided, further, that,
prior to the Stockholders' Meeting, (y) the Special Committee on behalf of the
Company may upon the bona fide unsolicited request of a Third Party (as
hereinafter defined) furnish information or data (including, without limitation,
confidential or non-public information or data) relating to the Company or its
subsidiaries for the purposes of an Acquisition Proposal and participate in
negotiations with a person making an unsolicited bona fide Acquisition Proposal
if the Special Committee believes that to do so could reasonably lead to a
Superior Proposal (as hereinafter defined) and (z) the Special Committee and the
Board may each withdraw or modify its recommendation relating to this Agreement
or the Merger if the Special Committee or the Board determines in good faith
after consultation with its financial advisor that the Merger is no longer in
the best interests of the Company's stockholders and that such withdrawal or
modification is, therefore, advisable in order to satisfy its fiduciary duties
to the Company's stockholders under applicable law.
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As used in this Agreement, "ACQUISITION PROPOSAL" means any proposal for any
of the following: (i) a transaction pursuant to which any person (or group of
persons) other than the Parent or its affiliates (a "THIRD PARTY") acquires 50%
or more of the outstanding shares of the Common Stock of the Company pursuant to
a tender offer or exchange offer or otherwise, (ii) a merger or other business
combination involving the Company pursuant to which any Third Party acquires 50%
or more of the outstanding shares of the Common Stock of the Company or of the
entity surviving such merger or business combination, (iii) any other
transaction pursuant to which any Third Party acquires control of assets
(including for this purpose the outstanding equity securities of subsidiaries of
the Company, and the entity surviving any merger or business combination
including any of them) of the Company having a fair market value equal to 50% or
more of the fair market value of all the assets of the Company immediately prior
to such transaction, (iv) any public announcement by a Third Party of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, (v) a self tender offer, or (vi) any transaction
subject to Rule 13(e)-3 under the Exchange Act other than the Merger.
As used in this Agreement, "SUPERIOR PROPOSAL" means an Acquisition Proposal
that (i) is not subject to any financing contingencies or is, in the good faith
judgment of the Special Committee after consultation with its financial advisor,
reasonably capable of being financed and (ii) the Special Committee determines
in good faith, based upon such matters as it deems relevant, including an
opinion of its financial advisor, would, if consummated, result in a transaction
more favorable to the Company's stockholders, other than Parent and its
affiliates, from a financial point of view than the Merger.
(b) Prior to providing any information to or entering into discussions with
any person in connection with an Acquisition Proposal by a person as set forth
in Section 4.2(a), the Special Committee shall receive from such person an
executed confidentiality agreement in reasonably customary form and shall notify
Parent (and in the case of an Acquisition Proposal that is received by the
Company or Parent, such party shall immediately notify the Special Committee)
orally and in writing of the existence of any Acquisition Proposal (and in the
case of an Acquisition Proposal that is received by the Company or Parent, such
notice shall include, without limitation, the material terms and conditions
thereof including the identity of the person making it) or any inquiries
indicating that any person is considering making or wishes to make an
Acquisition Proposal, as promptly as practicable (but in no case later than
three business days) after its receipt thereof. The Company will, to the extent
reasonably practicable inform Parent on a prompt basis of the status of any
discussions or negotiations with any such Third Party, and any material changes
to the terms and conditions of such Acquisition Proposal. At least ten
(10) days prior to either (x) accepting any Superior Proposal or (y) any change
by the Board or the Special Committee in their respective recommendations of the
Merger (if following the receipt of any Acquisition Proposal), the Company shall
advise Parent orally and in writing of such Acquisition Proposal and the
material terms and conditions of such Acquisition Proposal and the identity of
the Person making any such Acquisition Proposal. During such ten day period, the
Special Committee shall negotiate in good faith to determine whether Parent can
or is willing to make a proposal that is superior to the Superior Proposal.
(c) Subject to the foregoing provisions of this Section 4.2, the Company
shall immediately cease and cause to be terminated any existing discussions or
negotiations with any person (other than Parent and Acquisition Sub) conducted
heretofore with respect to any of the foregoing. The Special Committee agrees
not to release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
(d) The Company shall ensure that the officers and directors of the Company
and its subsidiaries and any investment banker, financial advisor, attorney,
accountant or other advisor or representative retained by the Company are aware
of the restrictions described in this Section 4.2.
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(e) In the event that any Third Party proposes to the Company or the Special
Committee that it has an interest in acquiring more than 10% and less than 50%
of the outstanding shares of Common Stock of the Company pursuant to a tender
offer or exchange offer or otherwise, the Special Committee shall immediately
notify Parent orally and in writing of the existence of such interest (such
notice to include, without limitation, the material terms and conditions thereof
including the identity of the person making the proposal). The Special Committee
may thereafter engage in discussions concerning such proposal, provided that the
Special Committee shall not provide any confidential information of the Company
to any such Third Party and provided further that the Special Committee will, to
the extent reasonably practicable, inform Parent on a prompt basis of the status
of any discussions with any such Third Party and any material changes to the
terms and conditions of such proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 ACCESS TO INFORMATION; CONFIDENTIALITY. During the period
between the date of this Agreement and the Effective Time, neither the Board nor
the Special Committee shall cause the Company or any of its subsidiaries not to
(i) afford to the officers, employees, accountants, counsel, financial advisors
and other representatives of Parent, Acquisition Sub or the financing sources of
Parent or Acquisition Sub reasonable access, during normal business hours to all
its properties, books, contracts, commitments and records, (ii) furnish promptly
to Parent or Acquisition Sub all information concerning its business, properties
and personnel as Parent or Acquisition Sub may reasonably request or (iii) make
available to Parent and Acquisition Sub the appropriate individuals (including
attorneys, accountants, and other professionals) for discussion of the Company's
business, properties and personnel as either Parent or Acquisition Sub may
reasonably request, in each case upon reasonable notice and subject to
applicable restrictions contained in confidentiality agreements to which such
party is subject. Parent and Acquisition Sub shall not disclose such information
to any person except to their attorneys and financial advisors and except as
required by law.
Section 5.2 CONSENTS; APPROVALS. The Company, Parent and Acquisition Sub
shall each use their commercially reasonable efforts to take all appropriate
action to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement, including, without limitation,
using their commercially reasonable efforts to obtain all consents, waivers,
approvals, authorizations or orders of Governmental Authorities and parties to
contracts with the Company or any of its subsidiaries and, in the case of
Parent, to obtain the financing necessary to satisfy the condition set forth in
Section 6.2(d). The Company, Parent and Acquisition Sub shall make all filings
including, without limitation, all filings with Governmental Authorities
required in connection with the authorization, execution and delivery of this
Agreement by the Company, Parent and Acquisition Sub, the consummation by them
of the transactions contemplated hereby and to fulfill the conditions to the
Merger, provided, however, that the Board shall not be required to take any
action otherwise required by this Section that it has determined in good faith,
based on the advice of counsel, would be reasonably likely to constitute a
breach of its fiduciary duties to the Company's stockholders under applicable
law and provided further that neither Parent nor any Parent Stockholder shall be
required to provide additional equity or collateral or personal guarantees or
pay any additional fees in order for Parent and Acquisition Sub to receive the
financing referred to in Section 6.2(d) except to the extent specified in the
preliminary summary of terms and conditions referred to in such Section 6.2(d).
The Company and Parent shall furnish all information required to be included in
the Proxy Statement and Schedule 13E-3 and amendments thereto, or for any
application or other filing to be made pursuant to the rules and regulations of
the United States, any state, the NYSE or any foreign governmental body in
connection with the transactions contemplated by this Agreement.
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Section 5.3 INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation set forth in the current Restated Certificate of Incorporation and
Amended and Restated By-Laws of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time or at any time prior thereto were
directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable law
or under the Company's Restated Certificate of Incorporation or Amended and
Restated By-Laws and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under applicable law or under
the Surviving Corporation's Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each present and former director, officer or employee of the
Company or any of its subsidiaries (collectively, the "INDEMNIFIED PARTIES")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages and liabilities incurred in connection with, and amounts
paid in settlement of, any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative and wherever asserted,
brought or filed, (x) arising out of or pertaining to the transactions
contemplated by this Agreement or (y) otherwise with respect to any acts or
omissions or alleged acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in the respective Restated Certificate of
Incorporation or Amended and Restated By-Laws of the Company or the subsidiaries
or any applicable contract or agreement as in effect on the date hereof, in each
case for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay the reasonable fees and expenses of such counsel, promptly after
statements therefor are received, and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld, delayed
or conditioned); and provided, further, that, in the event that any claim or
claims for indemnification are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until the disposition of any and all such claims. The Indemnified Parties as a
group may retain only one law firm in each jurisdiction to represent them with
respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. The indemnity agreements of Parent and
the Surviving Corporation in this Section 5.3(b) shall extend, on the same terms
to, and shall inure to the benefit of and shall be enforceable by, each person
or entity who controls, or in the past controlled, any present or former
director, officer or employee of the Company or any of its subsidiaries. The
indemnity agreements of Parent and the Surviving Corporation in this
Section 5.3(b) shall be in addition to any rights provided to any Indemnified
Parties under any contract with the Company and shall in no way limit any
additional rights such parties may have under such agreements.
(c) For a period of six years after the Effective Time, Parent shall cause
the Surviving Corporation or any successor thereto to maintain in effect, if
available, directors, and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Parent) (the
"COVERED PERSONS") on terms (including the amounts of coverage and the amounts
of deductible, if any) that are comparable to the terms now applicable to
directors and officers of Parent, or, if more favorable to the Company's
directors and officers, the terms now applicable to them under the Company's
current
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policies, and with insurers of no lesser financial standing than the insurers
issuing the Company's current policies; provided, however, that in no event
shall Parent or the Surviving Corporation be required to expend for each of such
six years an amount in excess of 300% of the annual premium currently paid by
the Company for such coverage; and provided further, that if the premium for
such coverage exceeds such amount, Parent or the Surviving Corporation shall
purchase a policy with the greatest coverage available for such 300% of the
annual premium.
(d) This Section shall survive the consummation of the Merger, is intended
to benefit the Company, the Surviving Corporation and the Indemnified Parties,
shall be binding on all successors and assigns of the Surviving Corporation and
shall be enforceable by the Indemnified Parties. In the event that Parent or the
Surviving Corporation or any of their successors or assigns (i) consolidates or
merges into any other person or entity and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person or entity, then and in such case, proper provisions shall be made so that
the successors and assigns of Parent or the Surviving Corporation (as the case
may be) assume the obligations of Parent and the Surviving Corporation set forth
in this Section 5.3.
(e) From and after the Effective Time, Parent unconditionally guarantees the
obligations of the Surviving Corporation arising under this Section 5.3.
Section 5.4 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be likely to cause any representation or warranty contained in
this Agreement to be materially untrue or inaccurate, or (ii) any failure of the
Company, Parent or Acquisition Sub, as the case may be, materially to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 5.5 FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties shall use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement,
provided, however, that the Board shall not be required to take any action
otherwise required by this Section that it has determined in good faith, based
on the advice of counsel, would be reasonably likely to constitute a breach of
its fiduciary duties to the Company's stockholders under applicable law. Parent
shall take all action necessary to cause Acquisition Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
subject to the conditions set forth in this Agreement. Parent and Acquisition
Sub shall use their best efforts to obtain the financing referred to in
Section 6.2(d). Notwithstanding anything to the contrary contained in this
Section 5.5, neither Parent nor any Parent Stockholder shall be required to
provide additional equity or collateral or personal guarantees or pay any
additional fees in order for Parent and Acquisition Sub to receive the financing
referred to in Section 6.2(d) except to the extent specified in the preliminary
summary of terms and conditions referred to in such Section 6.2(d).
Section 5.6 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult with
each other and the Special Committee before issuing any press release with
respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the other
parties, which shall not be unreasonably withheld, delayed or conditioned,
provided however, that a party may, without the prior consent of the other part,
issue such press release or make such
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public statement as may upon the advice of counsel be required by law or the
rules and regulations of the NYSE, if it has used all reasonable efforts to
consult with the other party.
Section 5.7 CONVEYANCE TAXES. Parent and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time.
Section 5.8 DELISTING OF SECURITIES. As soon as practicable following the
Effective Time, the parties hereto shall take all action reasonably necessary to
cause the Company's Common Stock to be de-listed from the NYSE and to cease to
be registered under the Exchange Act.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction or waiver to the extent permissible under law at or prior to
the Effective Time of all the following conditions:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction preventing the consummation of the Merger shall be in
effect; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or applicable to the Merger which
makes the consummation of the Merger illegal; provided, however, that prior to
invoking this condition, the party so invoking this condition shall have
complied with its obligations under Section 5.5.
(b) STOCKHOLDERS' APPROVAL. The Merger and this Agreement shall have been
duly approved by the Requisite Company Vote and by the holders of at least
50.01% of the outstanding Shares that are not owned or controlled by Parent, the
Parent Stockholders or their respective affiliates.
Section 6.2 ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND ACQUISITION
SUB TO EFFECT THE MERGER. Other than the obligations of Parent and Acquisition
under Section 5.3 which are not subject to satisfaction or waiver of the
following conditions, the obligations of each of Parent and Acquisition Sub to
effect the Merger and consummate the other transactions contemplated hereby are
also subject to the satisfaction or waiver by Parent and Acquisition Sub at or
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth in this Agreement shall be true and correct as of the date
of this Agreement and as of the Closing Date, as though made on and as of the
Closing Date, except for any representation or warranty that is expressly
limited by its terms to a particular date, which need only be true and correct
as of such date, and except for any failures to be true and correct that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect on the Company and Parent shall have
received a certificate (which certificate may be qualified by knowledge to the
same extent as the representations and warranties of the Company contained in
this Agreement are so qualified) signed on behalf of the Company by an executive
officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by an executive officer
of the Company to such effect.
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(c) DISSENTING SHARES. The aggregate number of Dissenting Shares shall not
exceed 5% of the total number of shares of Common Stock of the Company
outstanding on the Closing Date.
(d) RECEIPT OF FINANCING. Parent and Acquisition Sub shall have received
financing on terms satisfactory to Parent in its sole discretion sufficient to
(i) pay the Merger Consideration pursuant to the Merger, (ii) repay the
Company's existing outstanding indebtedness and (iii) pay the fees and expenses
required to be paid by the Company and Parent in connection with the
transactions contemplated by the Agreement. If financing is made available to
Parent in accordance with the preliminary summary of terms and conditions dated
April 9, 2001 provided to the Special Committee of the Board, the condition set
forth in this subsection (d) shall be deemed satisfied.
(e) LITIGATION. During the period between the date of this Agreement and
the Closing Date, inclusive, no claim, action, suit, proceeding or investigation
shall have been instituted or threatened in writing pursuant to which an
unfavorable judgment, order, decree, stipulation or injunction sought by any
person other than the parties to this Agreement or their respective affiliates
would reasonably be expected to (i) prevent consummation of any of the material
transactions contemplated by this Agreement, (ii) cause any of the material
transactions contemplated by this Agreement to be rescinded following the
consummation thereof or (iii) have a Material Adverse Effect on the Company or
Parent, and no such judgment, order, decree, stipulation or injunction shall be
in effect; provided, however, that this Section 6.2(e) shall not apply to any
litigation that has been filed prior to the date of this Agreement and as to
which service of process has been received by Parent or the Company in response
to Parent's announcement to engage in a going private transaction (the "PRIOR
LITIGATION"), except that this Section 6.2(e) shall apply to Prior Litigation if
such Prior Litigation is amended in a manner that would be reasonably expected
to result in the occurrence of any of the events contained in (i)-(iii) above.
(f) THIRD PARTY CONSENTS. The Company shall have obtained all consents and
approvals of third parties with respect to the transactions contemplated hereby
except for those consents and approvals, individually or in the aggregate, as to
which the failure to obtain would not reasonably be expected to have a Material
Adverse Effect on the Company before or following consummation of the Merger.
(g) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there shall
have been no change, occurrence or situation, individually or in the aggregate,
that is not the result of actions within the control or influence of the Parent
Stockholders and that has had or is would reasonably be expected to have a
Material Adverse Effect on the Company. Any change, occurrence or situation that
is directly or indirectly a consequence of a decision made by a Parent
Stockholder in the good faith exercise of his business judgment in his capacity
as a director, officer or employee of the Company shall not be deemed to be the
result of actions or inactions within the control or influence of the Parent
Stockholders for purposes of Sections 1.13, 6.2(g) or 7.3(b) unless the Parent
Stockholder was negligent in his actions or failure to act.
(h) AARON D. SPENCER. There shall not have been any material adverse change
in the health of Aaron D. Spencer.
Section 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger and consummate the
other transactions contemplated hereby is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
each of Parent and Acquisition Sub set forth in this Agreement shall be true and
correct as of the Closing Date, as though made on and as of the Closing Date,
except for any representation or warranty that is expressly limited by its terms
to a particular date, which need only be true and correct as of such date, and
except for any failures to be true and correct that individually or in the
aggregate have not had and would not
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reasonably be expected to have a Material Adverse Effect on the Company, and the
Company shall have received a certificate (which certificate may be qualified by
knowledge to the same extent as the representations and warranties of each of
Parent and Acquisition Sub contained in this Agreement are so qualified) signed
on behalf of each of Parent and Acquisition Sub by an executive officer of
Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND ACQUISITION SUB. Each of
Parent and Acquisition Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent and Acquisition Sub by an executive officer of Parent to such
effect.
(c) BRING DOWN FAIRNESS OPINION. AH&H shall have delivered to the Special
Committee, on or prior to the date that is five days prior to the Stockholders'
Meeting, a bring down of the fairness opinion referred to in Section 2.12.
(d) LITIGATION. During the period between the date of this Agreement and
the Closing Date, inclusive, no claim, action, suit, proceeding or investigation
shall have been instituted or threatened in writing pursuant to which an
unfavorable judgment, order, decree, stipulation or injunction sought by any
person other than the parties to this Agreement or their respective affiliates
would reasonably be expected to (i) prevent consummation of any of the material
transactions contemplated by this Agreement, (ii) cause any of the material
transactions contemplated by this Agreement to be rescinded following the
consummation thereof or (iii) have a Material Adverse Effect on the Company or
Parent, and no such judgment, order, decree, stipulation or injunction shall be
in effect; provided however this Section 6.3(d) shall not apply to any Prior
Litigation, except that this Section 6.3(d) shall apply to Prior Litigation if
such Prior Litigation is amended in a manner that would be reasonably expected
to result in the occurrence of any of the events contained in (i)-(iii) above.
Section 6.4 ADDITIONAL PROVISIONS. Any waiver by the Company of any
condition contained in this Article VI, any amendment to this Agreement, any
amendment to the voting agreements referred to in Section 3.6 or any decision by
the Company to terminate this Agreement pursuant to Section 7.1 shall require
the approval of the Special Committee.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, notwithstanding approval thereof by the stockholders of
the Company or Parent:
(a) by written consent duly authorized by the boards of directors of Parent,
Acquisition Sub and the Company;
(b) by either Parent or the Company if a court of competent jurisdiction or
Governmental Authority shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger;
(c) by Parent or the Company if the Effective Time shall not have occurred
on or before September 30, 2001, provided that the right to terminate this
Agreement under this Section 7.1(c) shall not be available to a party if its
breach of or failure to fulfill any obligation in any material respect under
this Agreement has been the cause of or resulted in such failure of the
Effective Time to occur;
(d) by Parent if the Board or the Special Committee shall have (i) failed to
recommend, withdrawn or modified in a manner adverse to Parent or Acquisition
Sub, or publicly taken a position materially inconsistent with, its approval or
recommendation of the Merger, or (ii) approved, endorsed or recommended an
Acquisition Proposal;
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(e) by Parent by giving written notice to the Company in the event the
Company is in breach of any representation, warranty or covenant contained in
this Agreement and such breach, individually or in combination with any other
such breach (i) would cause the conditions set forth in Sections 6.2(a) or
6.2(b) not to be satisfied and (ii) such breach is not cured within 20 days
following delivery by Parent to the Company of written notice of such breach;
(f) by the Company by giving written notice to Parent in the event Parent or
Acquisition Sub is in breach of any representation, warranty or covenant
contained in this Agreement and such breach, individually or in combination with
any other such breach (i) would cause the conditions set forth in Sections
6.3(a) or 6.3(b) not to be satisfied and (ii) such breach is not cured within
20 days following delivery by the Company to Parent of written notice of such
breach;
(g) by Parent if a claim, action, suit, proceeding or investigation referred
to in Section 6.2(e) shall have been instituted or threatened.
(h) by the Company if a claim, action, suit, proceeding or investigation
referred to in Section 6.3(d) shall have been instituted or threatened;
(i) by the Company if any of the conditions set forth in Section 6.1 (other
than Section 6.1(b)) or 6.3 shall become impossible to fulfill (other than as a
result of any breach by the Company of the terms of this Agreement) and shall
not have been waived in accordance with the terms of this Agreement;
(j) by the Parent if any of the conditions set forth in Section 6.1 (other
than Section 6.1(b)) or 6.2 shall become impossible to fulfill (other than as a
result of any breach by the Company of the terms of this Agreement) and shall
not have been waived in accordance with the terms of this Agreement; or
(k) by the Company upon ten (10) days written notice to Parent, if all of
the following conditions have been met: (x) the Company has complied with the
terms of Section 4.2, (y) the Company has received an Acquisition Proposal that
the Special Committee has concluded, based on the advice of a nationally
recognized investment banking firm (which shall include AH&H), is a Superior
Proposal, and (z) the Special Committee determines in good faith, after
consultation with outside counsel, that it is advisable to do so in order to
comply with its fiduciary duties under applicable law.
Section 7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers, employees or stockholders except (i) as set
forth in Sections 7.3 and 8.1 hereof, and (ii) nothing herein shall relieve any
party from liability for willful breaches of this Agreement.
Section 7.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated.
(b) In the event that the Agreement is terminated pursuant to any provision
of Section 7.1 other than subsections (d), (f), (h) or (k) thereof and the
reason for such termination is not the result of actions within the reasonable
control of Parent Stockholders, the Company shall promptly reimburse Parent for
its and Acquisition Sub's actual and reasonable expenses incurred in connection
with the transactions contemplated by the Agreement, provided that in no event
shall the amount of such reimbursement exceed $500,000.
(c) In the event that this Agreement is terminated by the Company pursuant
to Sections 7.1(d) or 7.1(h) or in the event that the Special Committee engages
in discussions permitted under Section 4.2(e), the Third Party acquires shares
of Common Stock of the Company and the condition set forth in Section 6.1(b) is
not satisfied or duly waived, the Company shall promptly reimburse Parent for
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its and Acquisition Sub's actual and reasonable expenses incurred in connection
with the transactions contemplated by the Agreement, provided that in no event
shall the amount of such reimbursement exceed $1,500,000
(d) In the event that this Agreement is terminated by the Company pursuant
to Section 7.1(k), the Company shall pay Parent a fee of $1,500,000 plus the
amount of Parent's and Acquisition Sub's actual and reasonable expenses incurred
in connection with the transactions contemplated by this Agreement (the
"TERMINATION FEE"), provided that in no event shall the aggregate amount of the
Termination Fee exceed $3,000,000.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as otherwise provided in this Section 8.1, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties, covenants and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 7.1, as the case may be, except that this
Section 8.1 shall not limit any covenant or any agreement of the parties that by
its terms contemplates performance after the Effective Time and that shall
survive in accordance with its respective terms.
Section 8.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) IF TO PARENT OR ACQUISITION SUB:
c/o Uno Restaurant Corporation
100 Charles Park Road
West Roxbury, MA 02132
Telecopier No.: (617) 218-5215
Telephone No.: (617) 218-5375
Attention: Aaron D. Spencer
WITH A COPY TO:
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Telecopier No.: (617) 310-9597
Telephone No.: (617) 439-2595
Attention: Constantine Alexander, Esq.
James E. Dawson, Esq.
(b) IF TO THE COMPANY:
Uno Restaurant Corporation
100 Charles Park Road
West Roxbury, MA 02132
Telecopier No.: (617) 323-9200
Telephone No.: (617) 363-6906
Attention: General Counsel
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WITH A COPY TO:
Brown Rudnick Freed & Gesmer
One Financial Center
Boston, MA 02111
Telecopier: (617) 856-8201
Telephone No. (617) 856-8200
Attention: Steven R. London, Esq.
and to:
Skadden Arps Slate Meagher & Flom LLP
1 Beacon Street
Boston, MA 02108
Telecopier: (617) 573-4822
Telephone No.: (617) 573-4800
Attention: Thomas Dougherty, Esq.
Section 8.3 CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) "AFFILIATE" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person;
(b) "BUSINESS DAY" means any day other than a day on which banks in New
York are required or authorized to be closed;
(c) "CONTROL" (including the terms "CONTROLLED BY", and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "KNOWLEDGE" means, with respect to any matter in question, actual
knowledge of any executive officer of the entity in question with respect to
such matter after making reasonable inquiry of officers and other employees
charged with senior administrative or senior operational responsibility of such
matters;
(e) "PERSON" means an individual, corporation, partnership, limited
liability company, association, joint venture, trust, unincorporated
organization, other entity or group (as defined in Section 13(d)(3) of the
Exchange Act); and
(f) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent or any other person means any person or other legal entity
of which the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
Section 8.4 AMENDMENT. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that no amendment by the
Company shall be effective unless first approved in writing by the Special
Committee; and provided, further, that after approval of the Merger by the
stockholders of the Company, no amendment may be made that by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 8.5 WAIVER. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts,
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(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that no waiver or extension by the Company shall be effective unless first
approved in writing by the Special Committee. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or parties
to be bound thereby.
Section 8.6 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.7 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
Section 8.8 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than, with
regard to expenses incurred by the Parent Stockholders on behalf of Parent prior
to March 1, 2001, as set forth in a letter agreement dated October 20, 2000),
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein.
Section 8.9 ASSIGNMENT; GUARANTEE OF ACQUISITION SUB OBLIGATIONS. This
Agreement shall not be assigned by operation of law or otherwise, except that
Parent and Acquisition Sub may assign all or any of their rights hereunder to
any affiliate provided that no such assignment shall relieve the assigning party
of its obligations hereunder. Parent unconditionally guarantees the full and
punctual performance by Acquisition Sub of all of the obligations hereunder of
Acquisition Sub or any such assignees.
Section 8.10 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Section 5.3 (which is intended to be for the benefit of the parties specified
therein and may be enforced by such parties) and rights given under this
Agreement to the Special Committee (which are intended to be for the benefit of
the stockholders of the Company other than Parent and its affiliates and may be
enforced by the Special Committee).
Section 8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 8.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware.
Section 8.13 COUNTERPARTS AND FACSIMILE SIGNATURE . This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. The delivery of a signature page of this Agreement by one party to
each of the other
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parties via facsimile transmission shall constitute the execution and delivery
of this Agreement by the transmitting party.
Section 8.14 INTERPRETATION. The parties hereto acknowledge that certain
matters set forth in the Company Disclosure Schedule and certain matters set
forth in the Parent Disclosure Schedule are included for informational purposes
only, notwithstanding the fact that, because they do not rise above applicable
materiality thresholds or otherwise, they would not be required to be set forth
therein by the terms of this Agreement. The parties agree that disclosure of
such matters shall not be taken as an admission by the Company or Parent, as the
case may be, that such disclosure is required to be made under the terms of any
provision of this Agreement and in no event shall the disclosure of such matters
be deemed or interpreted to broaden or otherwise amplify the representations and
warranties contained in this Agreement or to imply that such matters are or are
not material and neither party shall use, in any dispute between the parties,
the fact of any such disclosure as evidence of what is or is not material for
purposes of this Agreement.
IN WITNESS WHEREOF, Parent, Acquisition Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
UNO RESTAURANT HOLDINGS CORPORATION
By: /s/ AARON D. SPENCER
-----------------------------------------
Name: Aaron D. Spencer
Title: Chairman
UNO ACQUISITION CORP.
By: /s/ AARON D. SPENCER
-----------------------------------------
Name: Aaron D. Spencer
Title: Chairman
UNO RESTAURANT CORPORATION
By: /s/ CRAIG S. MILLER
-----------------------------------------
Name: Craig S. Miller
Title: President and Chief Executive
Officer
A-23
EXHIBIT B
DELAWARE CODE
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER, CONSOLIDATION OR CONVERSION
SECTION 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing
pursuant to Section228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a
nonstock corporation; the words "stock" and "share" mean and include what is
ordinarily meant by those words and also membership or membership interest
of a member of a nonstock corporation; and the words "depository receipt"
mean a receipt or other instrument issued by a depository representing an
interest in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
Section251(g) of this title), Section252, Section254, Section257,
Section258, Section263 or Section264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange
or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
or (ii) held of record by more than 2,000 holders; and further provided
that no appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
SectionSection251, 252, 254, 257, 258, 263 and 264 of this title to
accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
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c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph;
or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under Section253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such
a provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting
of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal rights
are available pursuant to subsection (b) or (c) hereof that appraisal
rights are available for any or all of the shares of the constituent
corporations, and shall include in such notice a copy of this section.
Each stockholder electing to demand the appraisal of SUCH STOCKHOLDER'S
shares shall deliver to the corporation, before the taking of the vote on
the merger or consolidation, a written demand for appraisal of SUCH
STOCKHOLDER'S shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of SUCH STOCKHOLDER'S
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days
after the effective date of such merger or consolidation, the surviving
or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section228 or
Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that appraisal
rights are available for any or all shares of such class or series of
stock of such constituent corporation, and shall include in such notice a
copy of this section; provided that, if the notice is given on or after
the effective date of the merger or consolidation, such notice shall be
given by the surviving or resulting corporation to all such holders of
any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after
the effective date of the merger or consolidation, shall, also notify
such stockholders of the effective date of the merger or consolidation.
Any stockholder entitled to appraisal rights may, within 20 days after
the date of mailing of such notice, demand in writing from the surviving
or resulting corporation the appraisal of such holder's shares. Such
demand will be sufficient if it reasonably informs the
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corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders
on or within 10 days after such effective date; provided, however, that
if such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer
agent of the corporation that is required to give either notice that such
notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more
than 10 days prior to the date the notice is given, provided, that if the
notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the
effective date of the merger or consolidation, any stockholder shall have
the right to withdraw SUCH STOCKHOLDER'S demand for appraisal and to accept
the terms offered upon the merger or consolidation. Within 120 days after
the effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation surviving
the merger or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or consolidation
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement shall be
mailed to the stockholder within 10 days after SUCH STOCKHOLDER'S written
request for such a statement is received by the surviving or resulting
corporation or within 10 days after expiration of the period for delivery of
demands for appraisal under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register
in Chancery in which the petition was filed a duly verified list containing
the names and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their shares have
not been reached by the surviving or resulting corporation. If the petition
shall be filed by the surviving or resulting corporation, the petition shall
be accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper
of general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
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(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting corporation or by
any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final determination
of the stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting corporation pursuant
to subsection (f) of this section and who has submitted SUCH STOCKHOLDER'S
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that
SUCH STOCKHOLDER is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together
with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders
of shares represented by certificates upon the surrender to the corporation
of the certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or
to receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a
written withdrawal of SUCH STOCKHOLDER'S demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection
(e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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EXHIBIT C
60 state street
boston, ma 02109
adams, harkness & hill
the emerging Growth investment bank
April 4, 2001
Special Committee of the Board of Directors +617.371.3900
Uno Restaurant Corporation ww.ahh.com
100 Charles Park Road
Boston, MA 02132
Members of the Special Committee:
You have requested our opinion (the "Fairness Opinion") as to the fairness,
from a financial point of view, of the $9.75 per share cash consideration to be
received in connection with the proposed merger (the "Merger") of Uno Restaurant
Corporation (the "Company") and Acquisition Corp., pursuant to the draft
Agreement and Plan of Merger (the "Merger Agreement") dated April 4, 2001, by
holders of Company Common Stock not affiliated with Acquisition Corp (the
"Minority Shareholders").
Adams, Harkness & Hill, Inc., as part of its investment banking activities,
is continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. We have been engaged to render a
Fairness Opinion in connection with the Merger by the Special Committee of the
Board of Directors of the Company and will receive a fee for our services.
Our Fairness Opinion addresses only the fairness of the Merger Consideration
from a financial point of view to the Minority Shareholders and does not address
any other aspect of the Merger, nor does it constitute a recommendation to any
holder of Common Stock as to how to vote with respect to the Merger. In the
ordinary course of our business, we may trade in the Common Stock of the Company
for our own account and for the accounts of our customers and may at any time
hold a long or short position in the Company's Common Stock.
In developing our Fairness Opinion, we have, among other things:
(i) reviewed the Company's Forms 10-K, 10-Q and other documents as filed with
the Securities and Exchange Commission for the five-year period ending
March 31, 2001; (ii) analyzed certain internal financial statements including
projected financial and operating data concerning the Company prepared by
Company management; (iii) analyzed the potential pro forma financial effects of
the Merger on the Company; (iv) conducted discussions with members of senior
management of the Company; (v) reviewed the historical market prices and trading
activity for the Company Common Shares and compared them with those of certain
publicly traded companies we deemed to be relevant and comparable to the
Company; (vi) compared the results of operations of the Company with those of
certain companies we deemed to be relevant and comparable to the Company;
(vii) compared the financial terms of the Merger with the financial terms of
certain other mergers and acquisitions we deemed to be relevant and comparable
to the Merger; (viii) reviewed the Merger Agreement and Exhibits thereto; and
(ix) reviewed such other financial studies and analyses, performed such other
investigations, and took into account such other matters as we deemed necessary,
including an assessment of general economic, market and monetary conditions.
In connection with our review and arriving at our Fairness Opinion, we have
not independently verified any information received from the Company, have
relied on such information, have assumed
boston - san francisco
C-1
Special Committee of the Board of Directors
Uno Restaurant Corporation
April 4, 2001
Page 2
that all such information is complete and accurate in all material respects, and
have relied on assurances of management that they are not aware of any facts
that would make such information misleading. With respect to any internal
forecasts reviewed relating to the prospects of the Company, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of Company management. We have also assumed
that the Merger will be consummated upon the terms set forth in the Merger
Agreement.
Our Fairness Opinion is rendered on the basis of economic and market
conditions prevailing and on the prospects, financial and otherwise of the
Company known to us as of the date hereof. It should be understood that
(i) subsequent developments may affect the conclusions expressed in this
Fairness Opinion if this Fairness Opinion were rendered as of a later date, and
(ii) Adams, Harkness & Hill, Inc. disclaims any obligation to advise any person
of any change in any manner affecting this Fairness Opinion that may come to our
attention after the date of this Fairness Opinion, except as expressly provided
in the Merger Agreement. We have not conducted, nor have we received copies of,
any independent valuation or appraisal of any of the assets of the Company. In
addition, we have assumed, with your consent that any material liabilities
(contingent or otherwise, known or unknown) of the Company are as set forth in
the financial statements of the Company.
It is agreed between the Special Committee and Adams, Harkness & Hill, Inc.
that this letter is for the information of the Special Committee and the Board
of Directors of the Company and may not be used for any other purpose without
our prior written consent, except that this Fairness Opinion may be included in
its entirety in any filing made by the Company with the Securities and Exchange
Commission with respect to the Merger as contemplated. It is also agreed that
this Fairness Opinion does not address the relative merits of the Merger or the
other business strategies that the Special Committee has considered or may be
considering, nor does it address the decision of the Special Committee or the
Board of Directors of the Company to proceed with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration is fair, from a financial point of view, to the
Company's Minority Shareholders.
Sincerely,
ADAMS, HARKNESS & HILL, INC.
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EXHIBIT D
INFORMATION RELATING TO THE DIRECTORS AND EXECUTIVE OFFICERS
OF UNO RESTAURANT CORPORATION, UNO RESTAURANT HOLDINGS
CORPORATION, UNO ACQUISITION CORP. AND THE PRINCIPALS OF UNO ASSOCIATES
I. DIRECTORS AND EXECUTIVE OFFICERS OF UNO RESTAURANT CORPORATION
The name and position and the principal occupation or employment, business
address and material occupations, positions, offices or employment for the past
five years, of each director and executive officer of Uno Restaurant Corporation
are set forth below. Mr. Spencer is a member of the Spencer Group and
Mr. Miller, Mr. MacPhail, Mr. Fox and Mr. Vincent are members of the Management
Group. The business address of each director and executive officer of Uno
Restaurant Corporation is c/o Uno Restaurant Corporation, 100 Charles Park Road,
West Roxbury, Massachusetts 02132. The business telephone number of each
director and executive officer of Uno Restaurant Corporation is (617) 323-9200.
Aaron D. Spencer, Uno's founder, has been Chairman of the Board since 1986
and previously served as Uno's President until 1986 and as Uno's Chief Executive
Officer until September 29, 1996. Mr. Spencer has 34 years of experience in the
restaurant industry. He was the founder and owner of Uno's predecessor, which
operated a chain of 24 Kentucky Fried Chicken franchised restaurants at the time
the restaurants were sold.
Craig S. Miller has served as a director of Uno since 1985, has been Uno's
President since 1986 and was appointed Chief Executive Officer on September 30,
1996. From 1986 to December 1998, he also served as Uno's Chief Operating
Officer. From 1984 to 1986, Mr. Miller served as one of Uno's Vice Presidents
and then as Executive Vice President. Prior to 1984, he spent 11 years with the
General Mills, Inc. restaurant subsidiary, including four years in various
executive capacities with Casa Gallardo Mexican restaurants and six years with
the Red Lobster restaurant chain. Mr. Miller has a total of 32 years of
experience in the restaurant industry.
Paul W. MacPhail was appointed Executive Vice President and Chief Operating
Officer on October 23, 2000 and was elected to serve as a director in 2001.
Previously, Mr. MacPhail served as Executive Vice President and Chief Operating
Officer from December 1998 to April 2000 and was Uno's Senior Vice
President-Operations from January 1997 to November 1998. From October 1994 to
January 1997, he served as Divisional Vice President-Operations and from
November 1992 to October 1994, he served as a Regional Director of Operations.
From 1990 to 1992, Mr. MacPhail served as a General Manager and Senior
Operations Manager. Prior to joining Uno, Mr. MacPhail served for eight years as
a general manager with Ground Round, Inc. Mr. MacPhail has a total of 16 years
of experience in the restaurant industry.
Alan M. Fox was appointed Executive Vice President on November 30, 1999 and
has been President of Uno Foods Inc., Uno's subsidiary responsible for consumer
products distribution, since 1990. From 1990 to 1999, Mr. Fox was Uno's Senior
Vice President-Purchasing. Mr. Fox served as Senior Vice President-Purchasing
and Development from 1989 to 1990, and served as Vice President of Purchasing
from 1988 to 1989. Prior to joining Uno, from 1971 to 1988, Mr. Fox served as
Vice President-Purchasing at Worcester Quality Foods, Inc., a wholesale food
service distributor. Mr. Fox has a total of 29 years of experience in the
restaurant and food service industries.
Robert M. Vincent was appointed Executive Vice President, Chief Financial
Officer and Treasurer in April 2000 and was Uno's Senior Vice President-Finance,
Chief Financial Officer and Treasurer from July 1997 to March 2000. Prior to
that, he served as Vice President-Finance and Controller from November 1992 to
June 1997 and was Uno's Controller from April 1992 to October 1992. Prior to
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joining Uno, Mr. Vincent served as chief financial officer and vice
president-finance at Omega Corporation from 1988 to 1992, and vice
president-finance at Boston Restaurant Associates from 1985 to 1988. From 1976
to 1985, Mr. Vincent worked at Ogden Corporation in a variety of finance
positions. Mr. Vincent has 24 years experience in accounting and finance.
Mark A. Jones was appointed Senior Vice President-Development in
November 1999. Prior to joining Uno, Mr. Jones served for 20 years for Darden
Restaurants in a variety of positions. From 1992 to 1998, he was the vice
president of market development and real estate and from 1987 to 1992 he was the
vice president of construction and facilities. Mr. Jones served as the director
of construction from 1986 to 1987 and as the national manager of new designs and
remodels from 1982 to 1986. Prior to that he was the manager of expansion and
remodeling from 1979 to 1982. Mr. Jones has a total of 21 years of experience in
the restaurant industry.
George W. Herz II was appointed Senior Vice President, General Counsel and
Secretary in February 2000. He served as Vice President, General Counsel and
Secretary from November 1999 to February 2000. Prior to joining Uno, Mr. Herz
served as vice president and general counsel for Sbarro, Inc. from
November 1995 to November 1999. From 1993 to 1995, Mr. Herz was general counsel
for Minuteman Press International, and from 1983 to 1993 he served as corporate
counsel for that company.
M. Heyward Whetsell, Jr. was appointed Senior Vice President-Marketing in
June 2000. Before joining Uno, Mr. Whetsell was senior vice president-marketing
for TCBY Systems from March 1998 to June 2000. From 1996 to 1997 he was vice
president-advertising for Extended Stay America, Inc., and from 1995 to 1996 he
served as director-marketing for the Shoney's Division of TPI Restaurants, Inc.
Prior to that, Mr. Whetsell worked in the advertising industry for 22 years,
serving in a variety of positions.
Tamara P. Davis has served as a director of Uno since 1999. Ms. Davis is an
investment banker and served as president, chief executive officer and director
of UST Leasing Corporation from 1987 to 1993. She served as a senior vice
president at US Trust from 1983 to 1993, as well as an assistant vice president
and corporate finance officer at BankAmeriLease Group, Inc., a subsidiary of
Bank of America from 1979 to 1983. Prior to that, she was the assistant dean of
humanities at Santa Ana College from 1977 to 1979 and an educator. Ms. Davis
currently is chairman of the Massachusetts State College Building Authority and
vice chairman of the Massachusetts Educational Financing Authority. She is also
a director of the Massachusetts Board of Higher Education and a former director
of MuseumShop.com, Inc.
John T. Gerlach has served as a director of Uno since 1987. Mr. Gerlach has
been the director of the Graduate Business Program of Sacred Heart University
since July 1992. He was the director of the Center for Policy Issues of Sacred
Heart University from January 1990 to July 1992. From 1988 to 1990, he was an
adjunct professor of finance in the Graduate School of Business at Drexel
University. From 1986 to 1988, he was associate director of Bear, Stearns & Co.
From 1985 to 1986, he was a consultant for The Horn & Hardart Co., and from 1982
to 1985, he was the president and chief operating officer of The Horn & Hardart
Co. Prior to that time, he was a vice president of General Mills Inc. He is
presently a director of Marketing Services Group, Inc. and Security American
Financial Enterprises, Inc.
Kenneth D. Hill has served as a director of Uno since 1999. Mr. Hill was the
president of international development for Applebee's International, Inc. from
1994 to 1995. Prior to that, he was the executive vice president and chief
operating officer of Applebee's International, Inc. from 1991 to 1994. From 1990
to 1991, he was the president and chief executive officer of Creative Restaurant
Management, Inc. From 1985 to 1991, he was the president and chief executive
officer of T.J. Cinnamons, Ltd., and from 1973 to 1985, he was the president of
Gilbert/Robinson, Inc.
D-2
James F. Carlin has served as a director of Uno since 1996. Mr. Carlin is
the chairman and chief executive officer of Carlin Consolidated, Inc., a
management and investment company. He was the chairman of the Massachusetts
Board of Higher Education from 1995 to 1999. He was also the receiver for the
City of Chelsea, Massachusetts from 1991 to 1992. Mr. Carlin is a trustee of the
Massachusetts Health and Education Tax Exempt Trust and a trustee or director of
33 funds managed by John Hancock Mutual Life Insurance Company. He is also a
director of Alpha Analytical, Inc.
James J. Kerasiotes has served as a director of Uno since 1999.
Mr. Kerasiotes is president of Indian Hill Management. He was the chairman and
chief executive officer of the Massachusetts Turnpike Authority from 1996 to
2000. From 1992 to 1997, he was the Massachusetts Secretary of Transportation
and the chairman of the Massachusetts Bay Transportation Authority. From 1991 to
1992, he served as commissioner of the Massachusetts Highway Department. From
1985 to 1991, he was a founder, director and stockholder of Alpha
Analytical, Inc. and co-founder of Adion, Inc. From 1983 to 1985, he was a
director and shareholder of Rizzo Associates. From 1979 to 1981, he was the
Deputy Commissioner in the Massachusetts Commerce Department.
II. DIRECTORS AND EXECUTIVE OFFICERS OF UNO RESTAURANT HOLDINGS CORPORATION
("PARENT") AND UNO ACQUISITION CORP. ("NEWCO")
The executive officers of Parent and Newco are the same as the executive
officers of Uno Restaurant Corporation. The directors of Parent and Newco are
Aaron D. Spencer, Craig S. Miller, Paul W. MacPhail, Alan M. Fox and Robert M.
Vincent. The principal occupation or employment, business address and material
occupations, positions, offices or employment during the past five years for
each executive officer and director of Parent and Newco are described in Part I
above. The business address of each executive officer and director of Parent and
Newco is c/o Uno Restaurant Holdings Corporation, 100 Charles Park Road, West
Roxbury, Massachusetts 02132. The business telephone number of each executive
officer and director of Parent and Newco is (617) 323-9200.
III. PRINCIPALS OF UNO ASSOCIATES
Aaron D. Spencer is the general partner of Uno Associates, a Massachusetts
general partnership owned 80% by Mr. Spencer and 10% by each of Mark Spencer and
Lisa Cohen, Mr. Spencer's two adult children, and formed for the purpose of
holding shares of common stock of Uno Restaurant Corporation. The principal
occupation or employment, business address and material occupations, positions,
offices or employment for the past five years for Mr. Spencer are described in
Part I above and are set forth below for Mark Spencer and Lisa Cohen. The
business address of Uno Associates and Mr. Spencer is c/o Uno Associates, 100
Charles Park Road, West Roxbury, Massachusetts 02132. The business telephone
number of Uno Associates is (617) 323-9200.
Mark Spencer is a professional photographer. Since June 1995, he has been
employed by Carriage House Photography. His business address is 100 School
Street, Andover, Massachusetts 01810.
Lisa Cohen has been a customer service representative at the advertising
firm of Faux Design since September 2000. Prior to September 2000, Ms. Spencer
was a homemaker. Her business address is 72 Rowe Street, Auburndale,
Massachusetts 02466.
D-3
UNO RESTAURANT CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2001
The undersigned hereby appoints Craig S. Miller and Robert M. Vincent and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Uno Restaurant Corporation
that the undersigned may be entitled to vote at the Special Meeting of
Stockholders of Uno Restaurant Corporation to be held on ,
, 2001, at 10:00 a.m., local time, at the located at
, and at any and all postponements, continuations and adjournments
thereof, with all powers that the undersigned would possess if personally
present, upon and in respect of the following matters and in accordance with the
following instructions, with discretionary authority as to any and all other
matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC
INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
X Please mark votes as in this example.
1. To adopt and approve the Agreement and Plan of Merger, dated as of
April 19, 2001, among Uno Restaurant Holdings Corporation, Uno Acquisition
Corp., and Uno Restaurant Corporation, pursuant to which Uno Acquisition
Corp. will be merged with and into Uno Restaurant Corporation, with Uno
Restaurant Corporation as the surviving corporation.
/ / FOR / / AGAINST / / ABSTAIN
2. To grant discretionary authority to the attorneys and proxies appointed
hereby to vote in favor of any postponements or adjournments of the meeting,
if necessary.
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE CONSIDERED A VOTE FOR EACH OF THE PROPOSALS ABOVE, UNLESS THE
CONTRARY IS INDICATED IN THE APPROPRIATE PLACE.
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE, WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
Signature: Date:
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Signature: Date:
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